Lord Hameed—Khalid Hameed, Esquire, CBE, having been created Baron Hameed, of Hampstead in the London Borough of Camden, for life—Was, in his robes, introduced between the Lord Dholakia and the Lord Janner of Braunstone.

Lord Truscott: My Lords, the noble Lord is correct that disabled people are a vulnerable group to whom we wish to increase our support. Winter fuel payments, as the noble Lord mentioned, are paid only to those aged 60 or over. We are, however, giving support to disabled people to assist with fuel poverty. That is why we have the disability living allowance and the attendance allowance, which are included in the eligibility criteria for the Warm Front scheme that I mentioned. The installation of central heating and insulation is available to disabled people under the scheme, which we want to expand.

Lord Maxton: My Lords, does my noble friend agree that the fast introduction of compulsory ID cards would make this legislation irrelevant? We would then be able to produce an ID card when we vote. As the ID card will be a smart card, it will allow for the safe introduction of electronic voting in a variety of places and thus increase the number people taking part in democracy.

Lord Evans of Temple Guiting: My Lords, the evidence we have shows that during the period 2000-06, the Crown Prosecution Service looked at 91 files containing allegations of voting offences, and of those 40 related to personation problems. So although it is a small problem, it is a problem. Even though voters will not be signing for their ballot papers next week, if the presiding officer has any suspicions, he may ask the elector two questions. If the presiding officer is not satisfied with the answers, he has the power to ensure that a ballot paper is not handed over. Protections are in place, but I think we would all agree that if signatures were necessary, that would be even more effective.

Lord Falconer of Thoroton: My Lords, these matters were told to Parliament first on 29 March. The matters of the machinery of government are a matter for the Prime Minister.

Lord Falconer of Thoroton: My Lords, a balance has to be struck between on the one hand ensuring that the Prison Service, Probation Service and the courts know where the political leadership is. Time has been set aside to have the discussions; the working party was set up before the announcement was made to Parliament and the matters were discussed with the judiciary before the matter was raised in Parliament.

Lord James of Blackheath: rose to call attention to budgetary reporting and the use of resources in the National Health Service; and to move for Papers.
	My Lords, the title of our debate today indicates a concern with how the resources of the National Health Service are allocated, used and are subject to budgetary reporting. The debates on the National Health Service that I have attended so far contained wish lists similar to those that children send to Santa Claus at Christmas, which is all very well if Mummy and Daddy have the money to pay for the things asked for. In this case I have never been certain that the NHS either has the resources or is quite aware where they are.
	I start with my concerns based on the published quarterly accounts, as filed in the Library here. I shall then explain how they are confirmed by the overall expenditure figures and conclude with a plea to the Government to present NHS accounts in a manner that would better allow us to monitor its solvency and financial performance.
	The previous two published quarterly filings of the Department of Health report on the National Health Service show what looks to be a very encouraging trend: there is a forecast improvement from a £683 million deficit to a £13 million surplus in just six months. However, we should be a little cautious before we start to celebrate.
	I have had an exchange of Written Questions and Answers with the noble Lord, Lord Hunt, from December 2006, and he has been very patient and tolerant in answering seven of my eight Questions. I have asked the eighth Question three times and received three Answers from him, but they were never responses to the question that I asked, which is rather surprising because it was not a particularly swervy ball. All I asked was the value of the deferred cost of the redundancy programme and the lost value of income expected from that programme, which will now occur in the middle of this year, and which I needed for my modelling exercise. In one of his Answers, the noble Lord emphasised that the new forecast surplus of £13 million for the current year is after deferral of the previously announced redundancy programme but also after utilising the last available contingency for the NHS this year, amounting to £350 million.
	The noble Lord, Lord Hunt, also told me in a Written Answer in January that the strategic health authorities had,
	"created one contingency through their management of central budgets".
	He went on to explain that SHAs had,
	"reported their ability to create an additional £100 million through their continued management of the central budget programme".—[Official Report, 29/1/07; col. WA 17.]
	Such creationism is of some concern, as it is surely normally to be found only in the Book of Genesis. Are we now to believe that the Government are looking for divine intervention to save their National Health Service figures?
	Finally, the Minister told me that costs and benefits arising from the reorganisation of strategic health authorities and PCTs should be included in their forecast outturn for 2006-07; yet he told me in his Answer of 27 February that the latest additional £100 million was not related to redundancies. So I have two questions: where is the benefit previously offered by the head-count reduction, and where did the allegedly created new £100 million come from? What previously budgeted expenditure has been cut? Which patients are going untreated this financial year for the sake of filling the hole from last year's deficit? What drugs have been withdrawn? Which doctors and nurses have been laid off?
	Armed with that partial information, I set out to follow an audit trail to explain an overall turnaround of £697 million in just six months. Your Lordships may relax, safe in the knowledge that I am not going to recount the torturous calculation, but I find the National Health Service filing unreasonably complex, lacking in reasonable transparency and raising far more questions than it answers. Try as I might, I cannot achieve a reconciliation.
	I have two examples. First, I tried to see how the £94 million deficit now forecast in the latest report arises, consistent with the previous report. The November report states that gross deficits now stand at £1,179 million compared to the previous forecast of £683 million a quarter earlier. When you are talking about an improvement, it is strange to start by recording a deterioration of £296 million. That is also after offsetting the gross surpluses, stated to be running at £736 million. Looking for my audit trail, I deduct the £736 million from the £1,179 million deficit, which gives me the net deficit position of £443 million before contingencies.
	If I deduct the £350 million contingency, I am left with a balance of £93 million, only £1 million different from the net deficit then forecast. If that is indeed what I am supposed to do, I have got there completely by luck not by any mathematical process known in the accountancy world. It is also of concern that that still leaves £1 million short. It could be a rounding error or, I suppose, the ministerial tea and biscuit fund. Am I to assume that the calculative process that I have followed is correct? In that case, I submit that it is almost impenetrable to general review and useless as a guideline to the financial standard to which the NHS is actually performing to.
	Next, I tried to do a counter-check on those figures by looking at them from a completely different direction. I add the £94 million deficit forecast in November to the figure of £100 million, which is the Minister's claim of "new capital" created by the National Health Service. Those figures together should explain £194 million of the forecast improvement, so I then deduct that from the forecast performance improvement of £697 million, and I now have £603 million left to explain the improvement, and there is not one single word of help on the subject in the NHS filing report. Reasonably, I should now add to that my guess of about £100 million for the revenue deterioration from deferring the redundancy programme, for which the Minister has not given me a figure, despite my thrice-asked Question. I now have a figure of £703 million unexplained improvement in NHS performance over some 26 weeks. That is a turnaround sufficient to represent a performance that would be the envy of nearly any of the top 100 companies on the London Stock Exchange.
	The report says that NHS policy is to eliminate the 175 outstanding cash deficits still predicted in February. So how can it be that the net difference between gross deficits and gross surpluses of those trusts appears to be £147 million, when the claimed deficit for the entire National Health Service was then stated to be only £94 million? Has anyone ever heard of a parent company that can trade at less net funds worth than the value of its subsidiary companies previously? The obvious inference is that some trusts are not only currently in deficit but intended to remain continuously in deficit, which would raise very serious questions as to whether they represent a dangerous solvency problem both for themselves and for the NHS as a whole.
	Mr Richard Douglas, director-general for finance and investment at the NHS, seems to give away the game in his contribution to the February report, in which he tells us three pieces of information. First, without the reserve, the deficit would still be £437 million—no change. Forecast gross deficits still total £1,318 million, which is up by £6 million. Finally, 35 per cent of organisations are forecasting deficits, compared with 33 per cent at quarter two. He has told us three pieces of information, two of which are worse and one of which reflects a standstill, and he is trying to explain an improvement.
	When the Government claim that the number of trusts in deficit has fallen, we further learn that 71 trusts reported a deficit in 2005-06, and mergers have reduced the number of those in deficit from four to two. Some 108 PCTs reported a deficit in 2005-06. Following PCT configuration, whatever that might be, 80 have been reconfigured, thereby creating 38 PCTs that still report 2005-06 deficits.
	Is the magic formula of NHS accountants simply to merge trusts in deficit to reduce the numbers reported, with no benefit to the health of patients? Of the 57 organisations reporting a deficit in 2005-06 and which were still in deficit in 2006-07, 43 are said to be in a turnaround programme. What did they do with the other 14? Are they to become invisible by the year end through further deft accounting mergers? Anyone wondering what happened to Baldrick after the Blackadder series ended should now rest happy in the knowledge that he is in charge of the National Health Service and using his cunning plans to present the accounts so that they appear to be in balance.
	The February report has another strange feature, which puts a question mark over the perceived opinion that the south of England is the affluent part of the land that is keeping afloat our friends in the north. What friends they are, given that our friends in the north are keeping the southern parts of the NHS afloat. We hear of the north-south divide, but rarely do the Government tell us how the north-east, north-west and Yorkshire and Humber regions are sacrificing patient care to subsidise every strategic health authority south of Manchester—every one. Noble Lords may check the figures themselves. The good people of Islington should be most grateful to the people of Hull, including, of course, the Deputy Prime Minister, for achieving a generous £3 million surplus, enough to wipe out the deficit allowed for the residents of Islington, which was recently home to the Prime Minister, where the trust is in deficit by almost that amount.
	I know that the Minister will have an immediate answer to that criticism, because the figures for the distribution of funds to the northern strategic health authorities have been loaded with extra value to provide them with extra resource, and that has been taken away in the balancing exercise. Against that, the north needed the money because it had been underprivileged in distribution terms in the past, and the time when it can be restored is merely being put back. Yet the Prime Minister seeks 24-hour surgery, although perhaps he should have mentioned that before the PFI contracts that guarantee only daytime operations with huge penalty costs for service out of hours were entered into.
	I now turn to the overall expenditure figures. The shadow Secretary of State for Health in another place recently said that the Department of Health's original near-cash resource limit—a phrase that I shall explain later—was £71.5 billion. However, the Treasury has since revealed that the Department of Health spent £74.3 billion of near-cash; that is a £2.7 billion overspend, which is almost five times worse than the department's published figure. A Minister in the department admitted that that was directly caused by the deficits arising in trusts, stating that the NHS deficit was the main reason for additional near-cash expenditure.
	The shadow Secretary of State added that the only way that the Department of Health had reduced its overspend from £2.7 billion to £580 million, the figure that I mentioned earlier, was by underspending on its non-cash resources. It did that by writing down the value of the future claims on the NHS for clinical negligence. However, underspending on non-cash has no immediate impact on the actual resources available to the NHS and so cannot mitigate the effects of overspend on near-cash—or, in plain English, it cannot prevent the sick going untreated.
	Perhaps I may explain the Government's concept of near and non-cash. Suppose that I say to my wife, "I will give you £100,000 for a dress account next year", but she does not need that £100,000 for the whole of this year. That £100,000 cash then continues to my benefit, so I will offer it to my mortgage company or back to my wife for the housekeeping this year. In this example, the dress-purchasing account represents the non-money which I seek to use as an asset as near-money in the current year. I can raise money with my bank or whatever. The Government would call the money they have to spend in the current year near-money; that is why I regret so much the absence of a consolidated balance sheet for the NHS. In this example I will effectively have used the £100,000 offer of a dress account for my wife as non-money, and that is what the Government are doing, which has reduced the overspend from £2.7 billion to £580 million. That is an outrage and a totally unacceptable method of government financial accounting. It would be unfair even to call it an "Enron technique". Not even Enron ever did anything as bad as that, and I would not insult it with a similar accusation.
	The famously prudent Chancellor has a much-abused golden rule requiring any near-cash overspend to be repaid within a year. So that is another £1.5 billion of health cuts that we can confidently expect to be inflicted on everyone next year or in the rest of this year. Expect plenty more closures and redundancies in clinical services. At the end of the day, the Chancellor and his Department of Health accountants will learn, as Enron, Barings and WorldCom did, that creative accounting cannot create cash.
	I offer the Government suggestions for a six-point plan to deal with all this. Could they please consider a completely new accounting format that is transparent and allows us to see these things properly, without the invention of such phrases as "near cash" and "non-cash", which have no place here? Could all the accounts please show a clear correlation between the NHS as an effective holding company and its structure of quasi-subsidiary trusts? May we have an urgent review of the budget process by which trusts have allocations, so that they are not required to carry huge concessions and contingencies into the year end to bail out the parent? May we please have a clear statement of what the audit committee procedure is through the whole structure?
	As the Government will be aware, in any major commercial enterprise there may come a time when the shareholders—for which, in this case, read taxpayers and electorate—force through and demand a change of management control from chairman down. A new board will be appointed and the first thing that it will need to do in any rescue strategy is to mount a full financial accounting investigation. Experience shows that this is far better done under the direction and control of the old board before it is ejected. This provides a better understanding to explain both in its own time and own words the account of its stewardship, while the incoming new board will have a better basis on which to start the task of putting everything together. The time for that investigative report from accountants is now. I beg to move for Papers.

Lord Bradley: My Lords, I also congratulate the noble Lord, Lord James, on his opening speech. I tried very carefully to follow his audit trail through accounting in the National Health Service—not totally successfully, but I certainly heard the word Manchester used. I shall concentrate my short remarks on the city of Manchester and on what has been achieved in the past 10 years.
	Although I entirely agree that there needs to be transparent accountability for expenditure in the National Health Service, the improvements in the quality of care in the city and city region of Manchester have been dramatic during the past 10 years. Those dramatic improvements have been based on the considerable investment, both capital and revenue, achieved under this Government. In the city, we now have a much clearer pathway, as a result of that investment, to high-quality primary and community care; clear routes into secondary care with significant investment in our district general hospitals; and further massive investment in tertiary services, which enable the highest quality specialist care to be provided in central Manchester and other specialist hospitals.
	That is against the background of huge health problems in urban centres such as Manchester, huge inequalities in health and huge problems with late referral, because people in urban centres do not always recognise their health problems. That means that investment is needed not only in hospital services but in primary community services to ensure that health problems are detected at the earliest opportunity.
	I should declare an interest both as a non-executive director of a hospital trust, now a foundation hospital, Christie Hospital, to which I shall return, and as non-executive chair of a local improvement finance trust—LIFT—company, which is responsible for the development of health centres, clinics and service centres for Manchester, Salford and Trafford. I start there because where we are dealing with areas of high deprivation and poor health, investment in primary services is crucial.
	During the past two or three years, at least 13 new health centres have been developed and built through the LIFT company, not only to provide high-quality GP practices in those centres but to enable a much wider range of screening and community services to be developed to ensure that we start to tackle inequalities of health. That is in partnership with local authorities. Although we may need clear accountability within the National Health Service, we must work in partnership with other providers, especially local authorities. With the reconfiguration of primary care trusts and consultation with local authorities, it will be crucial to have a strategic plan that drills down to the real needs of local communities.
	In south Manchester, for example, there has been huge investment in the South Manchester University Hospital and performance has been dramatically improved in recent years. Although statistics and targets are not everyone's preferred method of assessing the success of the National Health Service, they give clear indicators of progress. They also enable the organisation to see its direction of travel. To pick out one or two statistics in south Manchester, 97 per cent of all elective patients were able to book their appointments at a time convenient to them. That could not happen without the investment in our hospitals. Also, 97.8 per cent of patients were seen, treated and discharged from accident and emergency within four hours of arrival. That is a huge improvement on how accident and emergency units operated in the past.
	Turning to central Manchester, there has again been huge investment: a £600 million investment in a new hospital, with a new children's hospital under way as we speak and a £1 billion investment along the Oxford Road corridor linking the hospital more closely to the university—I should obviously declare an interest as an employee of the university. At the end of March 2006, no patient in central Manchester waited longer than 13 weeks for a GP out-patient appointment. Thirteen weeks is too long but is still a significant improvement on previous waiting times. No patient waited longer than six months for in-patient or day-case treatment—again, a huge improvement and, again, 98 per cent of all A&E attendees were seen within four hours. This must be seen against a backdrop of a continuing year-on-year increase in the demand for these services; they cannot be seen in isolation from the healthcare needs of the local population.
	In central Manchester, the trust performed outstandingly well in cancer treatment. At the financial year-end in March 2006, 100 per cent of patients received their treatment in 31 days after a diagnosis of cancer, against a national target of 98 per cent. In addition, 97 per cent of patients received their first treatment within 62 days of a first referral from a GP, against a national target of 95 per cent.
	I am proud that this Government have highlighted cancer as a key area for investment, because one in three people in this country is diagnosed with cancer, and one in four people actually dies from it. Unless we look at the investment in that area, we will not tackle one of the real killers in this country. Christie Hospital, of which I am a non-executive director, as I said, achieved foundation status on 1 April. I strongly agree with the noble Baroness, Lady Murphy, about the role of monitoring in that process. The process by which the hospital trust had to comply with the requirements, particularly the accounting and other financial requirements, which the noble Lord, Lord James, identified, was extremely hard and rigorous.
	The way in which the hospital's executive team moved the hospital forward so that it could comply with foundation-trust status should be a model for all hospitals. That status would be achieved at different speeds, but the model ensures the rigorous analysis of resources, accounting and governance in those hospitals to achieve real improvements, not to make profit but to make surpluses that can be reinvested in patient care in such hospitals. That is the crucial point.
	In the past financial year, Christie Hospital managed to create a surplus of £3.6 million, all of which will go back into improving clinical care in the hospital for the benefit of patients. The monitoring process should be commended for that. The surplus will enable Christie Hospital to expand its services in radiotherapy and chemotherapy, and to move services away from one site into the local community so that they are much more accessible to patients. It will also enable the hospital to develop its surgical expertise further and, crucially, its clinical trials expertise, which needs to be expanded for the benefit of all patients. The hospital will work closely to develop the Manchester Cancer Research Centre.
	I hope that the Minister will be able comment on the 62-day target for cancer treatment from first point through to referral and treatment in a specialist centre such as Christie Hospital. Ninety-six per cent of patients are treated within 31 days of referral. The problem arises downstream in the 31 days that it should take from initial GP referral to the patient's arrival at Christie Hospital.
	The hospital does not receive patients directly from GPs; it receives them from district general hospitals. There is a difficulty if those district hospitals do not identify the cancer needs of that patient in a timely way to enable Christie to comply with the 62-day target. I know that work is being done with the Healthcare Commission to look at this issue, but I hope that the Minister will recognise the complicated pathways from first referral by the GP to treatment in a specialist centre, and that this will be carefully monitored to analyse whether hospitals such as Christie are performing to the high standards to which we clearly believe we are.
	All these improvements in healthcare in a city such as Manchester could not have been achieved without the huge investment that has been made or without the continuing dedication of the staff and management of those hospitals to use those resources with rigour. I believe, as I have stated, that that rigour is now being applied to the National Health Service through the monitoring process for the benefit of patients. Such investment must continue year on year, otherwise those improvements will not be maintained. The direction of travel that has been achieved in recent years, together with the investment—both revenue and capital—has enabled a higher quality of healthcare service to be created in this country, and patients appreciate those improvements.

Baroness Verma: My Lords, I join other noble Lords in congratulating my noble friend Lord James of Blackheath on securing this important debate. My noble friend's knowledge and attention to detail is substantial and very difficult to match. It is incredible that after 10 years of a Labour Government and billions of pounds spent on the NHS, it is facing a financial crisis on an unprecedented scale. How on Earth are medical practitioners supposed to work with uncertainty, cutbacks and ward closures? It is clear that the Government, steered by the Chancellor, have concentrated on processes such as the length of time patients wait for their first treatment rather than on outcomes such as cancer survival rates, whether they are improving and if patients are happy with their treatment.
	Year on year since 2002, the NHS has finished each financial year in a worse state than the previous one. PCTs have fared equally badly, and it would appear that the combined deficits of all the NHS organisations are forecast to reach £1,318 million. Twinned with that is the fact that since 1997, productivity has fallen by 1.3 per cent each year. As has already been said, the Chancellor's decision that public sector organisations should adopt a system of financial accounting known as RAB—resource accounting and budgeting—but which he has now reversed, has led NHS trusts which are in deficit in one financial year having not only to face budget reductions in the next financial year but also to repay the deficit of the previous one. That is a ridiculous situation for any trust to find itself in. It has become something of a trademark for this Chancellor and a rod for the back of any incoming one.
	The Government have top-sliced allocations to PCTs in order to create a central reserve. This has left trusts with £1.1 billion less for their budgets. It is therefore hardly surprising that many members of the Government are openly campaigning against government policies—for example, Labour Party chairman Hazel Blears in her Salford constituency and Tessa Jowell in her south London constituency.
	The NHS has been reorganised nine times under Labour. Each reorganisation has cost millions of pounds. The Department of Health's own chief economist has recommended that workforce targets now be abandoned. The more one digs, the more incredible the figures appear. The NHS has 175,646 beds and decreasing, while it has 264,012 administrators. Just imagine the cost to the service of these extra people. If that is not bad enough, look at the Government's use of the private sector through its independent sector treatment centre programme. The Government have committed to paying for treatments at prices well over 11 per cent above the NHS cost.
	I live in the city of Leicester, where the Secretary of State for Health is our constituency MP. I assure your Lordships that feelings are running high among both NHS staff and the public, who see budget deficits and ward closures as a direct cut to their services. Hundreds of staff at the three Leicester hospitals have signed petitions to halt cuts in jobs at the hospitals, where 900 jobs are under threat with wider implications of more job cuts each year over the next 10 years. The Secretary of State's response was to say that the cuts were not for financial reasons but a result of listening to staff and patients. Can the Minister ask the Secretary of State which staff and what patients she spoke to? If it was a proper consultation, are the papers available for public reading?
	In Leicester, we have seen closures of mental wards, and two hospital wards are also being closed. The closure of the mental health wards, which operated at almost 100 per cent occupancy, is a worrying sign to patients, particularly the elderly—who suffer from dementia and other age-related mental health issues—that they will now have to seek treatment elsewhere. While hospital wards are closed and bed numbers reduced in cities such as Leicester where there is an ageing population, can the Minister give the House proper assurances that social care budgets will be fully funded to meet the demands of patient care in the community? It is really worrying. As someone with a business in the healthcare sector—for which I declare an interest—my experience has been that social care budgets are unacceptably under-funded, especially with increasing demands of social and primary care taking place in the community.
	In Leicester, we have seen huge changes in how people needing health and social care provision have been recategorised. With an increasing rate of reduction in the number of beds and hospital staff, how can patient care be met with the confidence for which the NHS used to be known? Does the Minister agree with me that all those working in the health service are right to feel unsure about their future? They feel demoralised, and are absolutely right to feel angry at the Health Secretary's arrogance in ignoring their concerns. Can the Minister assure the House that, before further cuts take place in Leicester's pathway programme—which is vigorously supported by the Leicester East MP, Keith Vaz—the £200 million cuts will be further and properly reviewed before taking place, so that all services for the people of Leicester are properly resourced?

Baroness Pitkeathley: My Lords, I am grateful to the noble Lord, Lord James of Blackheath, for securing this debate and giving us an opportunity to discuss a subject very close to my heart. From what we know of the noble Lord from his previous contributions to your Lordships' House, we would not have expected a paean of praise for the NHS, but he has exceeded my wildest expectations.
	It is customary at the start of a debate to declare relevant interests. My first is that I am not an accountant and scarcely understand a balance sheet. I am concerned about the performance of the NHS in responding to patient need, about which I shall speak today. I declare an interest as chair of the Specialised Healthcare Alliance and interim chair of the National Voices working group. My chief interest, however, is as a huge admirer of the NHS and, much more than that, someone who literally owes her life to it. That I am here today in good health, having made a miraculous recovery from almost certain death, is due partly to the devotion of my family and friends, who simply would not let me go, partly to my own determination to survive but overwhelmingly to the skill of the best surgeons, the best equipped intensive care units, the most able nurses and most committed ancillary staff that any gravely ill person could wish for. So your Lordships will not be surprised to know that I am a passionate supporter of the NHS and proud to serve in a Government who are similarly passionate about it and who have shown their commitment by the resources they have put in and by constantly improving their performance.
	Some among us remember the National Health Service under the previous Government, and were unfortunate enough to be patients under it. We remember the crumbling hospitals, the puddles of water in the corridors, the curtains that did not meet around the bed, people waiting well over 18 months—although that was the pledge—for surgery, and that there was almost no connection between social, primary and secondary care.
	NHS budgets have doubled since 1997 and will almost have tripled by 2008. The money has, as we have heard, employed more doctors and nurses, built new hospitals and primary care services, and totally transformed patient care. Of course, we have heard a great deal about deficits but let us remember that the net deficit was in fact only 1 per cent of the total income, and we are now returning it to balance with the latest figures predicting a surplus—although I know that the noble Lord, Lord James, would cast doubt on that.
	This has not been easy. Like any long-standing institution, the most difficult thing to change is the culture, especially when it involves getting to grips with long-standing and deep-rooted financial challenges and addressing the fact that, though we are one NHS and support all the different parts, we cannot reward inefficiency or allow high performing areas to subsidise those whose performance must be improved. Moreover, we should remember that there is more openness and transparency about the publication of NHS accounts at all levels under this Government than we have ever known. Meanwhile, patient care continues to improve.
	As noble Lords will remember, waiting lists are at a record low. In 1997, there were 1.1 million people waiting for treatment—some, as I have said, for well over 18 months. In November 2006 the figure was 769,000, the lowest number ever, with most treated in an average of seven weeks. The NHS is on track to deliver a reduction in deaths from cardiovascular disease, having saved almost 150,000 lives since 1996. Deaths from cancer in those under 75 fell by 16 per cent between 1996 and 2004, saving an estimated 50,000 lives. More people diagnosed with cancer begin their treatment within one month of diagnosis than ever before. Premature deaths from coronary heart disease have fallen by almost 36 per cent, and the estimated number of lives saved through the use of statins has tripled: 9,700 in 2005. The latest accident and emergency statistics show that patients are continuing to be seen and treated in line with targets. All of that is without the peripheral strides made in things like introducing the five-a-day regime, the fruit in schools regime and, as my noble friend Lord Morris, has mentioned, the ban on smoking.
	We must also remember the context in which these huge improvements are being made. We have an ageing population, whose illnesses are increasingly complex; treatments which were once pioneering have become commonplace; new drugs are constantly being developed; access to technology has transformed all our lives; above all, patients are no longer content to be passive recipients of whatever the NHS is prepared to provide but are increasingly well informed and demanding.
	It is quite possible that, of the countless improvements the Government have made and can be proud of, one of the most important is the recognition that the most important resource available to the NHS is its patients, as my noble friend Lord Morris mentioned. Welcome as the NHS was in 1948, no one could pretend that it put the needs of patients first. That continued until a Labour Government were willing to say boldly and firmly, against a lot of opposition, that the interests of patients must come before those of others—consultants, doctors, nurses or administrators. Their commitment to patient and public involvement, to shaping services around the individual patient, his or her family and carers, will in the end bring about more cultural change than anything else. That is encapsulated for me in my different experiences of the NHS, 14 years apart. I make no apology for sharing this personal experience with your Lordships.
	In the mid-1980s I was diagnosed, suddenly and shockingly, with a malignant tumour, for which I needed emergency surgery. Shortly after coming around from the anaesthetic, I was visited by a consultant who said that I was not to worry because 40 per cent of his patients made a complete recovery. I tried to keep calm and asked what I could do to ensure that I was not among the 60 per cent of patients who died. The consultant leaned towards me and said, "There's nothing you can do, my dear. Just leave it all to us". I felt that I got better despite him.
	Let me compare that with my treatment during a seven-month stay in hospital, five years into a Labour Government. I can honestly say that no treatment or procedure was carried out and no drug given to me without someone consulting me about how I felt about it and telling me how I could contribute. It could be said that that was because of my position—they do not get many baronesses on a public ward—but it happened to every other patient on the ward, including those for whom English was a second language and who were much less articulate than I. When I was not conscious, the consultation took place with my family. That is a huge turnaround in the culture and attitudes of the NHS.
	When you aim to provide a universal service, free at the point of use, you will never be able to get it totally right. Massive investment, even of the scale we have seen, cannot rectify decades of underfunding; professional attitudes may take a generation, or even longer, to change completely. There will always be more to do, but a huge amount has been done, and the result is an improved, more efficient and, most importantly, more patient-centred health service, in which the whole population, like me, can have confidence and trust.

Lord Dykes: My Lords, the noble Lord, Lord Selsdon, always makes extremely interesting speeches, and I am sure that we are grateful to him, not least for those international comparisons that he made in showing how well resourced and run are the health service equivalents in France and Germany. Because of the contributions of other noble Lords today, it has been an interesting debate, loaded with a lot of information, statistics and ideas from extremely talented and well informed speakers. I, too, add my thanks to the noble Lord, Lord James, for initiating it.
	I am very glad of this opportunity to take part from these Benches, not least because of our traditional staunch support for the National Health Service over the years. Should one live too much in the past? No, but if we have long enough memories it is worth recalling that back in 1948 the Tories, in contrast to now, were traditionally bitterly opposed to the creation of the National Health Service and anxious to ensure that the doctors at that stage had rather too favourable a deal for the commencement of the service. I exempt the noble Lord, Lord Fowler, from any connection with those long historical and distant events, and pay tribute to him as having been an outstanding Secretary of State for Health. He concentrated on a particular theme, which was one of his great and outstanding campaigns, and we thank him for that. I agreed with him in his exhortation that we should be balanced on these matters and speak in a more equilibrated way about the National Health Service, its pluses and minuses.
	The noble Baroness, Lady Thatcher, then Mrs Thatcher, as Prime Minister famously claimed that the National Health Service would be safe in Tory hands. However, even as that was uttered as an assertion that reassured many members of the public, the Tories had already started to undermine the basic stability and strength of our unique National Health Service with a foolish internal market system that looked as if it had been designed by eccentric right-wing economists and perhaps accountants lurking in caves in the hills. What they really liked deep down was a sinkhole service with a luxurious private sector alongside chipping away at its reputation as an amazing universal service of high quality. So let us keep these matters in perspective.
	We are told that there is severe cash crisis in the service at present, which has been much discussed today. However, that does not detract from the basic reality, even if one accepts that description. The vast majority of transactions in the health service are carried out effectively and well for the patients and the vast majority of those "customers"—to use the trendy modern word—are very satisfied with the service levels. That is, they are satisfied as far as we know, because most people who receive a good service do not then ring the press and tell them all about it; that is understandable. However, from time to time at the margin the service goes wrong, and there are now deficits in too many of the trust entities. But those are tiny amounts of money, even if they are important as deficits and even if they seem large in newspaper headlines. They are trivial, for example, in comparison with the huge amounts of money wasted foolishly and illegally in military adventures in Iraq by this Government and the colossal waste of human and financial resources in this shaming continuing war in Iraq. We opposed it right from the beginning, I am proud to say, and we urge the withdrawal of British forces by October this year.
	On the deficit, I believe that the most recent figure quoted in the Select Committee report and by Ministers was around 0.7 per cent of the total budget figures, which is hardly a huge enough figure for us to get into a frenzied hysteria over accounting correctness. Furthermore, the aim is to return to a financial balance in 2006-07 and to a surplus of £250 million subsequently—which is an even smaller percentage, but it would at least be a surplus if it could be achieved, and I wish the Government well in trying to do that.
	No organisation either public or private should be exempt from the need for strict financial discipline and efficient management as well as full accountability and visibility both to its stakeholders in the direct and wider sense and to Parliament and the Department of Health. The criteria for a giant public behemoth such as the NHS should be the same as for other entities, not more severe because of latent prejudice against the National Health Service officials or staff, most of whom are hard-working, conscientious and bewildered by some of the Government's suggestion about reform and modernisation.
	The report at the end of February from the Public Accounts Committee in the other place did an excellent job in highlighting some of the salient problems. With the rigorousness of that committee, I think that I prefer its conclusions to those of the noble Lord, Lord James. We on these Benches emphasise the need to study all the recommendations and suggestions clearly. We are grateful for the work put in by two of our own colleagues on the committee and the other members, aided and abetted as they were by the high-quality input of the Comptroller and Auditor-General. The committee concluded that the reasons for operating deficits in different NHS trusts were varied.
	Our preference on these Benches has been to avoid hasty and, perhaps, ill thought-out cuts if there is a good prospect of a return to balance and more over a reasonable period. I hope that the Minister will assure us that that is the Government's view. Over a longer time frame, measures to produce greater financial stability as well as efficiency measures on a greater scale are still required in this unique and special service. There has been constant tinkering by the department to get centrally mandated and often gimmicky reforms in place to assuage the tabloid comics that masquerade as newspapers, with their lurid stories, just as there has been endless tinkering with schools. The same mistakes have been made by Ministers in the Labour Government. Meddling by politicians and officials who do not know much about it should be resisted.
	Long-term strategic planning is often inadequate, especially in terms of work for specification changes and new building programmes. We also favour creating smaller blocks or units within the monolith so that local people participate in deciding where the money goes in a much more scientific and measured way. This party says to the Government: "Stop meddling so much in a way that causes morale either to fall sharply or even collapse in some trusts. Let the trusts themselves devise more efficient accountability and oversight steps within the regular management activity based on their own experiences, plus access to new capital expenditure funds".
	The department surely needs to stop meddling in the sense of chucking valuable and scarce money at silly experimental wheezes which otherwise can go into front-line care. Everybody in this wicked world needs sharp accountants; don't we all? The more desiccated, the better. Did I hear someone say, "What a pity"? We accept that as a logical proposition but they have to be part of the picture, not the total exclusion zone on these matters that they sometimes want to be. It is necessary for them to focus on these matters if they have the right sense of proportion in making suggestions. It would not be right for them to advise against the background of reducing the silly and superficial mania for market forces and balance-sheet obsessiveness for its own sake, just because Ministers have perhaps recently attended a trendy seminar on so-called NHS reform. The private medical lobbies that organise those really want greater financial manipulation for shareholders with more and more private inputs into the health service.
	Letting hospitals go bust is not a good approach—I deliberately put that mildly—and I hope that is not the Government's intention. Nor is large scale redundancies in what is inevitably a people business. It is bound to be so in future, too. We have to accept this labour-intensive background as a reality.
	I ask the Government to stop this horrendous nagging of front-line staff which deters quality people from even applying, although nowadays, as we know, the recruitment opportunities are sadly much more limited. We certainly need also to develop community hospitals and the widening of the service and clinical care range they can provide. We believe that modernisation of the financial and accounting procedures can definitely go hand in hand with the reality that the National Health Service, a unique one-off jewel in the crown of this country—we need to remember that—and frequently the envy of the world, particularly of other large population countries of 60 million people and more, is a public sector socio-humanitarian medical service paid directly from taxpayers' resources for the most part, with a significant stake in third party contract returns becoming a more important factor at the margin in the future. I am not referring to PFI per se.
	I strongly support the recommendations in the Public Accounts Committee report, especially Nos. 1 and 3. If I had time, I would quote at length from paragraphs four and five of its conclusions and recommendations, which make serious and important reading for accountants and others. The report reminded us starkly that the department was able to provide information on closures, layoffs, redundancies and stalled financial investment programmes only after—I stress "after"—the evidence-taking hearing. That is bizarre when one thinks about it. I should be grateful if the Minister could refer to it, if he has time. Perhaps the Department of Health needs more reform than the National Health Service. Some people consider that is the case. However, it should not be split into two like the Home Office.
	We need therefore to keep these dramas in severe perspective and not worry too much about the frenzied battle of circulation between the tabloids producing lurid stories when things often go badly wrong, with patients genuinely suffering and being frustrated, and sometimes much worse. That probably occurs in a small minority of cases so far as we can estimate.
	Most of the deficits occur more than once in the same trusts, which offers interesting lessons. It is perverse and ominous and needs special attention, which I hope the Government will give. As has been said several times in this debate, the figures are worse because of the pay deals that the department had not costed properly. Those constitute very large amounts of money. Both Houses need to be reassured that the individual financial recovery plans are realistic, allowing time if necessary for them to be fulfilled completely. The present day accounting rules seem out of date and excessively punishing and severe.
	Let us also all decide once and for all to abandon the foolish culture of permanent revolution in the National Health Service—a great device for appeasing ignorant right-wing journalists and their political pals who have often never even been inside an NHS hospital. As one of my colleagues in the mid-March debate in the Commons said, the way things are going we shall have three-week budgets in an already demoralised service just because some self-important special adviser in No. 10 or among the ministerial departmental advisers wants some policy spin at short notice.
	In that same debate, Steve Webb gave some good examples of the many functional disutilities that now harass National Health Service managers and staffers on the spot because of this childish hyperbolic reform frenzy, instead of a steady long-term modernisation and improvement programme which helps patients and enables staff and ancillaries to enjoy their work more. What a sinful suggestion I am making—to say that that would be a good thing. I hope that the Daily Mail and the Sun do not hear what I am saying.
	Mr. David Nicholson, the Chief Executive of the NHS, in his complex evidence to Mr. Edward Leigh's important committee, conceded finally that 0.5 per cent might be all right and a good figure to aim for as a surplus over all. These figures are very much at the margin. I hope that the Government will keep that in perspective.

Lord Bruce-Lockhart: rose to call attention to the recommendations of the Lyons inquiry into local government, and the future of local government funding; and to move for Papers.
	My Lords, your Lordships' House has many times advocated a renaissance in local democracy and has called for a stronger and wider role for local government. Therefore, I am grateful to have the opportunity of this debate, and I declare my interest as chairman of the Local Government Association.
	The Michael Lyons report, which involved valuable work on the role, function and funding of local government, has taken five years to complete. It started in March 2002, evolving into the Lyons inquiry and was finally published last month. Despite five years of professional and valuable work, on the day of publication the Government dismissed out of hand, in a press statement only, many of Sir Michael's recommendations. That was most unfortunate, as there are very important issues here. I shall attempt to draw out eight questions on which I trust the Minister will clarify the Government's position.
	The report starts by dealing with the role of local government. It rightly emphasises a council's unique role in the democratic representation and leadership of the area that it represents; in what Sir Michael calls "place-shaping"; in securing high-quality, value-for-money services; and in its wider responsibility for the social, economic and environmental well-being of the area that it represents.
	However, Lyons goes on to conclude that the improvement in public services, the prosperity of our cities, towns and villages, and the public's trust in governance are being held back by one single fact: over-centralisation by the state. Indeed, of all the major democracies and economies of the world, the United Kingdom Government exert a unique degree of central control over public services and local government. This stifling burden of control has simply wasted the public's money; it has sapped the initiative, enterprise and commitment to public service of many front-line staff; and it has denied the ability of local people to make local decisions. In doing so, the Government have eroded local democracy itself.
	There is now widespread recognition that radical devolution in England must take place. Last summer, the Secretary of State and the Chancellor made clear commitments to what they called "an era of devolution". The Local Government and Public Involvement in Health Bill is an ideal opportunity to turn this rhetoric into reality. The Local Government Association has welcomed the democratic and deregulatory steps set out in the Bill. However, I must make it clear that we are deeply concerned about the Government's commitment to devolution and the lack of steps set out in the Bill on the devolutionary front.
	Devolution has taken place in Scotland and Wales, but to whom will the Government devolve in England and what will they devolve? Sir Michael Lyons's report rightly focuses on economic prosperity, and the Treasury's own report, the sub-national review, seeks to ask what the natural economic areas are. The Local Government Association produced a report on this. Our consultants analysed the market areas, the labour, retail and housing markets and the travel-to-work areas, and it looked at the clustering of businesses in hi-tech sectors. It saw that the natural economies are not regional—not the nine regions as now—but sub-regions, very often matching the great cities and shire areas of England. Sir Michael Lyons supported this and said that devolution should be to sub-regions and to their cities and shires.
	Nowhere is the evidence for that clearer than in the great cities of England. The Treasury's Devolved Decision-Making Review Report of March 2006 drew attention to this. It looked at the prosperity of our great cities of England—Manchester, Birmingham, Sheffield, Liverpool and Newcastle—and it saw that they have only half the GDP prosperity of the major cities of Europe. The report went on to say that part of the reason for the success of European cities is that they enjoy far stronger devolved political autonomy over the economic levers of transport, planning and economic development, while English cities remain largely dependent on central government decision-making. So the first question is: to whom will the Government devolve? Will they continue to shuffle and add to regional quangos or will they devolve, as the economic evidence and analysis indicate, to the sub-regions, the cities and the shires?
	I wish to make a final point on powers, economic prosperity, our cities and social justice. We must strike the right balance between the role of the state and the issue of community and social responsibility. It is a tragedy that, after a decade with the luxury of a strong economy, the social divisions in our country are now wider. Certainly, the super-rich are richer, and the affluent are more affluent, but the 20 per cent or so who are least well off, are less well off today. Many people in our cities are living in very hard-pressed communities with areas of high crime, high welfare dependency, high drug use, low education aspirations and low expectations.
	It is therefore immensely important that both central and local government recognise their limits and that we understand that, ultimately, it is community capacity and the human spirit that provide a self-generating force for social and physical renewal. Indeed, I believe that the Leader of Her Majesty's Opposition is right to focus on social and community responsibility.
	In addition, there is a question not only of powers and roles but also of funding. First, to help local economies, the return of the business rate with the same RPI cap as at present would incentivise local authorities to drive forward house building, commercial development and regeneration. It would create a buoyant tax revenue stream and, at the same time, build a stronger relationship and partnership between the public and private sectors. Business would pay no more than it does at present because of the RPI cap. Therefore, will the Minister say whether the Government support Sir Michael Lyons's view and analysis about the advantages of the return of the business rate with an RPI cap? If not, can she say whether there is a problem of indecision or what the arguments against it are?
	The proposals on the supplementary business rate are a small step in the right direction but they are not the core issue. We need to remember that, if business rate still paid the same proportion of local government funding today as it did in 1997, every household's council tax would be £250 lower. We also need to remember that, with the business rate this year at RPI, set at a higher rate than the increase in grant to local authorities, the Treasury has kept a significant profit itself.
	We also need to consider why council tax has increased in unpopularity. Part of the reason is that over the past decade the increase in government grant to local authorities has been lower than the demand and cost imposed on local government by the centre. Whereas NHS real-terms spending has increased by 90 per cent, the real-terms increase for local authorities has been just 14 per cent. In 2002, the Audit Commission found that council tax had been forced up as a direct result of a shortfall in government grant. Therefore, we need to consider other existing buoyant tax streams.
	Michael Lyons has rightly—apart from the business rate—pointed us to a shift to an assigned income tax. That means the first one or so pence of existing income tax goes straight through to the local authority. According to the Treasury, over the past five years income tax has grown by 27.2 per cent, which is about 5.25 per cent a year, far ahead of the growth in grant to local authorities. Will the Government consider the option of an assigned income tax?
	At the same time, Michael Lyons has talked about specific grants. To make the Government's commitment to devolution real, local authorities must have the ability to spend on what local people and local authorities regard as local priorities. At present, some 21 per cent of local government funding comes in specific grants, tied by the Government to national not local priorities. As the Lyons report says, the Government must make a commitment to reduce drastically the specific grant. Will they give that commitment?
	I think we would all agree on council tax benefit. Michael Lyons reports that £1.8 billion of council tax benefit goes unclaimed each year. The take-up has fallen by 11 per cent since 1996-97. We believe that council tax benefit should be changed to an entitlement and become automatic. Indeed, if council tax benefit were a 100 per cent entitlement, people in the lowest decile of income would pay 2 per cent of their income on council tax rather than 8 per cent as they do now.
	The Local Government Association believes that the savings limit on council tax eligibility should rise to £50,000. Michael Lyons supports that, so the question is: when will the Government move to an automatic entitlement to council tax benefit? I understand from the DWP that that is possible. Do the Government also support the rise in savings limits?
	Other urgent funding issues remain unresolved because we have not moved to reform. Today, despite our pressing government for more than two years, there is still a considerable shortfall from the European legislation on waste and rising landfill taxes imposed on councils. At the same time, we have continually sought clarity and a resolution from the Chancellor about who is to pay for the ever-increasing cost of social care from the increasing demographic change in the number of elderly people. We simply must have a straightforward answer from the Chancellor. Is government grant to be matched to demographic change and population change, or is the Chancellor expecting council tax payers to pick up the bill, or expecting councils to impose stealth taxes on elderly people and acquire the money through increasing charging systems, as we have seen in other spheres?
	One of the most important issues is to restore confidence in funding local government to ensure that its allocation and distribution and the balance of funding between the council tax payer and central government is seen to be fair and transparent, and that there is absolute clarity about responsibility and accountability for council tax increases. We have had too many arguments from local and central government about whose fault it is. The Local Government Association has, therefore, proposed to Michael Lyons, as he in turn proposed in his report, that the Government should consider an Independent Grants Commission like in Australia and Denmark.
	Such a commission could start by allocating a base inflation increase to every council. On top of that, an independent commission would have responsibility for overseeing distribution and equalisation and bringing that up to date with the latest reliable population and demographic change statistics. In Australia, on top of that, the independent commission has what it calls a "new burdens regime", which it oversees, and ensures that any new legislation and government policy that have a cost impact on local authorities are paid for by the sponsoring government department not by council tax payers. A good example of that is that advanced corporation tax, which came so suddenly on pension funds, has cost my own county council and council tax payers in Kent £80 million.
	I believe that an independent commission would be seen to be impartial and fair. It would make the Government's role transparent and clarify who is responsible for council tax increases, which would thus strengthen accountability and local democracy. Will the Government consider an independent grants commission?
	There is much of value in Sir Michael Lyons's report. I am very grateful for his professional work and that of his officers and everyone across the country who made a contribution. I look forward to hearing the Minister's response. I beg to move for Papers.

Baroness Hollis of Heigham: My Lords, I am sure we are all most grateful to the noble Lord for introducing today's debate and for doing so in such a thoughtful and generous-spirited way.
	Most people, most of the time, cannot choose to go elsewhere for local authority services—roads, refuse collection and the like—unless they are very rich, very rural or very misogynistic. Local authorities' relations with their citizens, therefore, need to be based on trust: a belief that city halls fairly—a word I want to emphasise today—assess finances and deliver services and that their judgments are underpinned by democratic accountability.
	On fairness, I led for the Opposition in this House in the 1990s, when we replaced the highly regressive poll tax with a council tax levied on property, with a 90 per cent fit of income to tax band, abated by personal discounts. Now, more than 90 per cent of all households are in tax bands D and below, but about 5 per cent of the 20 per cent or so of households in bands E, F and G—I estimate about 1 to 2 per cent overall—are low income pensioners. So, in its turn, council tax is now regarded by many as unfair because it falls on poorer pensioners and because it funds services which seem to be a post-code lottery.
	However, fairness is a slippery concept. When I served on the Plant commission on voting systems, we could not agree whether Parliament represented communities, parties, minorities or individuals. Therefore, we could not agree on a fair voting system. Similarly, I suggest that the same is true for local government. There is no objectively fair system of local government finance. There simply is not. It depends on what criteria one values. The pensioner in the large house, who is asset-rich but cash-poor, believes that it is unfair that the house next door, with several earners, pays the same levy. As only 16 per cent of local authority spend, including on schools, comes from council tax and as much of local government finance comes from general taxation—earners pay taxes—and from business rates—workers also contribute to business rates—it is more than likely that the earners are subsidising that pensioner through their general taxation and subsidising the services which that pensioner probably uses more than they do.
	There is a real problem. Council tax benefit ensures that, on average, each income decile pays about 5 per cent of income in council tax—that is, if they claim—but about 200,000 households, who are naturally reluctant to leave the family home, pay 10 per cent or more and they struggle. That is why I welcome the Lyons proposal and the Government's sympathy for reviewing the workings of council tax benefit and making it a rebate—which had a 90 per cent take up among pensioners, unlike today's 55 per cent take up of CTB. Lyons estimates that removing capital limits would help 1 million pensioners reduce their average D-band of £25 by £10 at a cost of £260 million. His alternative suggestion interests me. It is that we would have a "circuit breaker": a percentage of income at which council tax was capped for the individual. That would require means-testing for pensioners to be extended, unless we could introduce a degree of automaticity, but I do not see how we could that.
	Would local income tax be fairer? Local income tax would help pensioners, who already have more generous tax treatment than workers, while leaving their assets and savings untouched. However, Lyons points out that LIT would hurt low-paid workers with families, mortgages and minimal savings who, although they are paying tax, are already more likely to be below the poverty line than pensioners. I suspect that we would have to extend tax credits to pay for it. I am pleased that my noble friend shows no inclination to go down that path.
	Fairness also requires that we ask whether local authority finance should be based on where one lives or where one works. After all, 40 per cent of workers cross at least one local authority boundary when going to work and put pressure on services without contributing to their cost. Norwich provides 40 per cent of Norfolk's jobs. In 2005-06, Norwich businesses paid £57 million into the national Exchequer, but through its district, county and police moneys Norwich received back only £37 million. In effect, £20 million went to support low-spending, low-service adjacent districts. That is their democratic choice, but their residents got free services from the city.
	There is little financial incentive for local authorities to invest in the local economy when it adds nothing to their financial receipts. As the noble Lord, Lord Bruce-Lockhart, said, the right response is to relocalise as far as possible the business rate, which was nationalised in 1990, which would fund such services and encourage local authorities to invest in their local economies, as well as abate gearing, which makes it so difficult for local authorities to manage their spending pressures. That is why I strongly support the Government's local authority business growth incentives—LABGI—and the Chancellor's welcome for Lyons's proposal for a new supplementary business rate for economic development.
	Should local authority finance reflect usage of service and extend charging? For swimming pools, yes, it should, but is it fair to charge heavy users of unavoidable local authority services—the young and the old—who have the least capacity to pay? What about refuse collection? Should large or disabled families, who may generate more waste in the same way that they use more water, be charged more? In other words, is it the job of local authorities to be a local welfare state, redistributing from those of working age to those younger, older or poorer or is that the job of the new 4-block grant?
	We agree that the so-called postcode lottery is unacceptable in health, but Lyons emphasises the place-shaping function of local government. To what extent should the council reflect community preferences and priorities? We should probably have national standards on education, classroom size and the national curriculum, but is it fair that local authorities should have different criteria of eligibility for social care, different charging patterns and different support packages? Is that postcode lottery unfair or does it reflect different but equally valid assessments of local need and local resources? What may appear fair in the eyes of the local community, as reflected in the ballot box—for Worthing is different from Wigan and may want to support its elderly in different ways—may still appear unfair to the individual user, the frail pensioner who compares her lot with that of her sister in a different borough. The combination of minimum standards and inspection, with additional headspace for local distinctiveness and decision-making—the route that the Government follow—is probably the balanced approach.
	For that to work, not only must local authorities earn the trust of their voters, but central government must in its turn learn to trust local government. Nye Bevan once said that the purpose of power is to give it away. I hope that Lyons will move us step by step towards the path of double devolution from central government to local government and from local government to its citizens. However, unless we can get a concept of funding for local authority services with as broad consent as possible, we will not have buy-in to a concept of fairness. That concept of fairness is essentially in the eye of each of us, and there is almost certainly no meeting of minds thereon.

Baroness Byford: My Lords, I, too, should like to thank my noble friend Lord Bruce-Lockhart for introducing this debate today. His contribution reflects his great knowledge and expertise gained over many years of service to local government. I would like at this stage to thank him and all those councillors who serve on a regular basis and have done so for many years. We should formally acknowledge their contribution to the betterment of their communities. While I have never been a councillor myself, both my brothers were county councillors and one of them is standing for council elections this time.
	I should like to reinforce three things particularly which my noble friend stressed: first, the release of central control over local government affairs; secondly, the release of local government to decide on their own local priorities; and, thirdly, to bear in mind the demographic changes. These are three very big challenges that we face.
	All of us are concerned about the ever-increasing council tax demands that fall through our letter boxes and which constitute an overwhelming burden for many recipients. Pensioners particularly on fixed, or even declining, incomes are particularly vulnerable as the rapid rise in house prices has made, as indeed the noble Baroness, Lady Hollis, mentioned, many "capital rich" but "income poor".
	The Lyons inquiry concluded that there is a need to reform council tax through the proposed revaluation of domestic property. That carries with it the possibility of intrusive and expensive inspections of family homes and a consequent major injustice. The Government have just begun to stress the need for householders to waste less energy and to maintain their properties in a fashion that will reduce the carbon footprint. They now propose to reward those who comply with an even higher council tax bill. That surely cannot be right.
	My honourable friend Caroline Spelman has recently confirmed that the Conservatives will scrap these particular proposals and abolish the inspectors' right of entry.
	On the subject of council taxes, I wish to draw to your Lordships' attention the anomaly that could become a disaster. Many councils are moving to a general waste collection on a fortnightly basis, interspersed with the collection of recyclable waste. The Local Government Association has, this week, produced an analysis that shows that many councils already using the new timetable are achieving higher recycling totals. I welcome that. We really do want to recycle and reuse what we can. My concern comes with the risk of the increasing numbers of fly-tipping incidents that we see both within our cities and counties where local authorities have to pay to clear it up.
	I understand that last year there were some 2.5 million fly-tipping incidents. The Countryside Alliance, in its fly-tipping campaign this week, costed their clearance at roughly £100 million to local authorities and some £47 million to the farming community. The danger is that a reduction in refuse collection, coupled with a requirement for householders to split their waste into different categories, could result in even larger increases in these costs. That is clearly not desirable.
	The Minister will not be surprised that I want to turn to the financing of rural local authorities. Research undertaken for the SPARSE groups—that is the groups of local authorities with the smallest populations—last year showed that the treatment of sparsity within the new relative needs formulae is similar to that for the previous resource allocation systems. Only about 3.9 per cent of the RNF for the three RNF blocs studied is allocated through sparsity indicators. But research undertaken two years ago for the Countryside Agency revealed substantial additional costs caused by sparsity, distance, additional time and the lower economies of scale. One local councillor in South Shropshire will tell you that to collect bins from a little hamlet where there are only a few people obviously costs much more than it does even in a large village, which in turn costs even more than it does in urban areas.
	Research shows that the average value of the standard of costs for many services provided by local authorities and other public service providers was, for the main urban areas, only 0.73 of standard cost; for the intermediate mixed urban and rural areas, 1.28 of the standard cost; and, for the mainly rural areas up to 1.85 of the standard cost. That is more than twice the standard cost of the provision in urban areas. I hope that the Minister will reflect on that when she comes to reply.
	My second major concern is that the various council tax reliefs are not equitable. For instance, many rural businesses are micro or small to medium-sized. Research demonstrates that their business rates remove a significantly higher proportion of profit than they do from large or very large companies. The CLA, which briefed us, stresses the necessity of relief for small businesses and social providers in rural areas, such as village and farm shops and rural post offices. I know that some currently get some form of relief.
	The most recent Sunday Telegraph revealed the £300 million tax raid planned for rural communities in the shape of a reclassification of agricultural land and buildings that would remove the current exemption from business rates. It is true that Sir Michael emphasises that,
	"marginal agricultural land should continue to receive full relief from business rates",
	but from that I gather that anything that smacks of commercial use will lose that indemnity.
	Lyons suggests the review of all forms of relief and exemptions. In my time allocation, I cannot go into detail today because that is a full and complex issue, but I hope that we will be able to debate that fully in future.
	I turn quickly to empty properties. The proposal to remove empty property relief has not been rural-proofed. I must here declaring a farming interest. It is a problem for some farmers when they have redundant buildings, because sometimes they cannot convert them to be put back into use because local planning will not allow them to do so. How can you tax a technically redundant building, the use of which cannot be altered? Again, I should be grateful for some comments.
	I shall talk briefly about the cost of regulation and legislation that central government introduces but that local government must pick up. I shall give two examples. The first is where the DfES has cited as good practice the granting of extra funds by local authorities to schools taking hard-to-place pupils. The figures recommended are £1,500 per pupil placed in the autumn term, £1,000 in the spring and £500 in the summer, but I understand that the Government will not pay for that. It is most likely that it will have to come from local government reserves.
	My second example is the question of transport to and from school. The home-to-school and home-to-college transport scheme especially affects local authorities with considerable rural responsibilities. Many of them do not own their own buses and have to hire them. The services are provided under contract and many authorities will have built in an escalator to cover contract cost increases. Those have recently included fuel price rises and revised specifications for new coaches.
	Those are but two brief examples; I suspect that many other noble Lords will give others. My plea is that whenever central government comes in with new ideas and pass them to local government, there must be adequate funding in the equation.

Lord Howard of Rising: My Lords, I thank the noble Lord, Lord Bruce-Lockhart, for introducing this important and interesting debate. I declare an interest as a councillor for the Borough Council of King's Lynn and West Norfolk, which, under the able leadership of John Dobson—who unfortunately has to retire because of ill health—backed up by good officers, was the only local authority to reduce tax last year. Moreover, taxes for the current year are not being increased; they will stay the same. This has been achieved by increasing efficiency, not by reducing services. Indeed, we maintain weekly rubbish collections, even though the Minister in another place claimed in a Written Answer that this was not so.
	The major issue that the Lyons report does not mention is that there is too much government. There is an underlying assumption and confidence in government's ability to cure ills, when one only has to look around to see that, except in limited circumstances, government creates as many problems as it solves. As there is more and more government—the explosion of the nanny state—so the ability to govern efficiently is reduced. The stage at which benefits outweigh costs has long been passed. In a bid for efficiency, targets are introduced, with the result that achieving targets has become more important than delivering the underlying services.
	Over the past 10 years, central Government have made ever increasing demands on local authorities, as was commented on by the noble Baroness, Lady Hollis. These demands have not been matched by funding. My council estimates that only half the increased costs it has to meet have been funded. Where local taxes have to be increased as a consequence, the blame for the tax increases shifts from central to local government. For example, the levy on landfill sites will increase each year for the next three years. This will have a huge impact on councils, but on historic criteria it is extremely doubtful that the tax taken will be returned to councils to assist them in waste recycling. The poor, old council tax payer will be forced to cough up while the revenue collected goes elsewhere.
	The several recommendations in the Lyons report that there should be greater disclosure of information on central versus local funding is to be welcomed. It would help to expose the problem of costs being loaded on to councils. In addition to the problem of increasing expense not being matched by income, councils now have to cope with the late delivery of the Comprehensive Spending Review. That prevents councils doing proper forward planning as they have no idea what their resources will be.
	I hope that the Minister will take note of the concerns expressed by your Lordships today and endeavour to take steps that will assist rather than impede local authorities in managing their affairs sensibly and efficiently.

Lord Hanningfield: My Lords, I, too, thank my noble friend Lord Bruce-Lockhart for introducing this valuable and timely debate, although it is disappointing that not many more people are participating. I am not speaking from the Front Bench, so I might be a little more determined in some of my comments. The Lyons inquiry is, above all, a missed opportunity for a long-anticipated radical reform of financing local government. It is too tame in its recommendation, too tame in its response to the excessively centralised structure of our country and, most of all, too tame in its approach to the principle of the shortfall in local government and the way in which this sector is financed. I declare an interest as leader of Essex County Council.
	Lyons has produced a report that is notably lacking in substantially radical ideas. However, some valuable reflections and sensible suggestions are proposed, which should be debated because much of the report's content could underpin the devolution agenda. I can understand its timidity; to a certain extent Sir Michael Lyons faced an almighty task and anyone would have found it almost impossible to satisfy all the stakeholders. Some people may say that his recommendations reflect a balanced and considered standpoint, but it is a shame that a number of his grander proposals have been diluted by the response of a rather sceptical, centralist Government. As I have said, the Lyons inquiry is a missed opportunity, and what an opportunity it could have been.
	The local government financial framework is excessively centralised. As my noble friend Lord Bruce-Lockhart has said, it is one of the most centralised anywhere. It is inflexible and its accountability is totally confused. It is an antiquated system—I shall go into that later—which is riddled with inequity and is now widely condemned by the public. The noble Baroness, Lady Hollis, might have defended council tax, but certainly the public do not like it any more. It has outlived its life and is harming the sector. Local government, of which I am a leader of a part of it, is unpopular because of council tax, not because of the services provided. It is time to develop a new system which must be more buoyant, transparent and accountable to local people. I propose a more fragmented system that makes use of a wider range of funding opportunities to generate income.
	It seems logical and just to eradicate council tax as we know it and to replace this revenue mechanism with a property tax, which could be used to pay for services directly related to the policies of property, such as waste collection and holes in the road outside people's houses. That would be understood. Such a tax would be clearly visible but its transparency and direct link with relevant services would hold resonance with what is becoming an increasingly alienated electorate.
	To supplement this income, it would be essential to find a more equitable method of funding the remaining local government services, such as adult social care, children's services and so forth. Lyons proposes a number of strategies, but I suggest that we have to be much more radical. We should look at a potential sales tax, and even possibly, speaking from these Benches, a local income tax. I would not rule out any of those options any more, and I shall return to them in due course.
	Lyons spent two and a half years producing a weighty, 400-page dossier. It delves in great depth into the data to develop solid, well-evidenced proposals. Much of its import is familiar. The recent local government White Paper, Strong and Prosperous Communities, and the LGA's Closer to People and Places set out many of the key arguments and advocate the same approach. Lyons' major contribution to the White Paper is the idea of place-shaping. One could argue that it is the key component of the devolution agenda. The concept has been widely praised in the local government press and much time has been devoted to discussing the best way of capturing its potential. In essence, it represents a shift away from the fear of a postcode lottery towards the embrace of a postcode democracy. Lyons maintains that variability in services and delivery is not always a bad thing. Do services need to be exactly the same in Cornwall as they are in Essex? This embodies the central purpose of local government: to deliver to local people what they want at the local level. In fact, most local government politicians in all parties advocate a devolutionary agenda, minimising reliance on and control by central government. Lyons supports this and suggests that place-shaping powers can stimulate innovation, thus reducing pressures on the tax base.
	The excessive centralisation of British politics, which has been carried out by all recent governments, is embodied in a bewildering array of targets, impeding local authorities in delivering local priorities. As the leader of a council that is involved in a highly successful local area agreement, I commend the whole principle of such agreements and, as Lyons said, think that they are part of the future direction.
	As I said earlier, the council tax has outlived its usefulness. MORI has identified council tax as the most visible and widely known of all UK taxes, which surprises me. How many people are aware that local government bodies are among the strongest performers in the public sector? I suspect only a very few. Most associate these excellent organisations with large, unseemly and unjustified tax rises. Local government bodies are unpopular purely because of council tax, not because of the good services they provide. I have criticised the current local government financial structure for being excessively centralised, but Lyons has put forward a number of proposals to overcome the problem. One of his main recommendations is the abolition of council tax capping, and I am disappointed to see that the Government have dismissed the proposal, demonstrating their centralist attitude and contradicting their wish for improved accountability expressed in their own White Paper.
	I mentioned earlier my contention that council tax should be eradicated and replaced with an alternative, a property tax that would account for perhaps half the current rates. Someone now paying £1,500 a year would pay £750 a year, which they would see was associated with the cost of the services being provided for their house. The rest of the money would have to come from another source of income. I repeat, it could be from VAT or a local income. Lyons cites flexibility of funding and expenditure as being of paramount importance to the devolutionary agenda. Ring fencing should be eradicated wherever possible in order to allow councils to have the ultimate say over how to spend local money. The combined effects of increased flexibility over local spending, the depleted financial burden of council tax and an increased ability to innovate could, over the medium to long term, facilitate greater local engagement with the place-shaping agenda. But these measures alone would be insufficient to raise the required revenue, and therefore we would have to look at other forms of tax.
	I also commend Lyons on suggesting the possibility of the added business rate. In Essex, an addition of 4p to the business rate could raise enough money to fund £320 million-worth of infrastructure projects. When speaking with local businessmen recently, the first thing they said they wanted was increased infrastructure. I hope that the Government will give this proposal much more serious consideration. Even if it is not as much as I would like to see in the future, it would be a start, and therefore I will be interested in the comments of the noble Baroness on the proposal.
	I finish by saying that it is time all of us looked across the whole agenda of local government finance. Enough is enough. If we are going to make local accountability work, we need to find new ways of financing local government.

Lord Oakeshott of Seagrove Bay: My Lords, this report is the ultimate long-grass job from the Government. It was set up in July 2004, had its remit extended twice and then was barely mentioned in Gordon Brown's Budget speech; indeed, it was buried on Budget day. When I was vice-chairman of the finance committee of Oxford City Council in the mid-1970s—I was a Labour councillor and we had got control—I remember that we were in favour of a local income tax. We were promoting it strongly in those days. I follow up, and back up, my noble friend Lady Hamwee's remarks regarding the longer term: how much longer does the longer term have to be before we get some statement of government policy?
	The key theme that has run through our debate today has been fairness. I was struck by the remarks of the noble Lord, Lord Bruce-Lockhart, about social divisions being wider in this country and the super-rich being more affluent; indeed, I propose to give one or two examples of that a little later on. The noble Baroness, Lady Hollis, with her great experience, both in this place and on Norwich Council, also talked about fairness, but I must say to her that the really fair way for pensioners or anyone else to pay for local services is with local income tax. That is based squarely on people's ability to pay.
	The two dramatic tables on pages 228-29 of the Lyons report clearly show the burden of council tax as a proportion of income, whereby it is falling all the way from a heavy proportion of poorer people's income right down to a negligible proportion of that of the rich. Council tax is the classic unfair tax. I thought Lyons did a good and thorough job. I felt he became a little political in some cases, but none the less the basic analysis is all there to look at. We on these Benches welcome his confirmation that local income tax is feasible in this country. He explored the fairness issues very well too; his analysis of the council tax bands, and the support for higher bands if we keep council tax, was right.
	I turn to two specific areas that are a particular source of concern. First, on the empty property rates, an issue raised by Lyons and then—because it raises a lot of money, for one thing—taken up vigorously by the Chancellor. Here I declare an interest as a pension fund investment manager on commercial property. What research was done by Lyons as a basis for his calculations, and indeed by the Treasury, in arriving at the estimated figure of £950 million a year that will be raised from this tax? I am bound to say I think it will be considerably more. I was speaking at a property conference yesterday in Cardiff with pension fund members, advisers and experts from the property industry, who were raising serious concerns with me, particularly about south Wales where a large amount of property is developed over the years, industrial property in particular, which they believe will suffer a serious hit in terms of these empty rates.
	Specifically, in the estimates made by Lyons or by the Treasury, what proportion of the empty property that is going to be paying these rates is owned by owner-occupiers, and what proportion is owned by Britain's pension funds and insurance companies? This will seriously affect the net yield that British pension funds get from their property. Typically, about 6 per cent or 7 per cent of their properties are empty; it is not difficult to calculate that that will cut pension funds' income from property by about 2 per cent to 3 per cent, with a consequent effect on capital values. I do not expect the Minister to give the answer today, but I would like to see a considered reply from her, because I believe that that could hit British pension funds for anything up to £5 billion on the capital value of their holdings. Given the effect of the dividend tax credit withdrawals and many other problems, that is the last thing pension funds need. This has not been thought through properly.
	Let me further explore the unfairness of the fact that council tax banding is effectively so narrow, in particular the very small proportion of capital value that the super-rich pay on their properties—their mansions, if you like. I have a couple of examples from Kensington and Chelsea where Mr Lakshmi Mittal owns property estimated publicly to be worth about £60 million. Sir Ronald Cohen is the Chancellor's adviser on social inclusion and is actively involved in various government projects. The Evening Standard said last week that,
	"he lives in one of the biggest residences in London—three houses knocked together in Kensington—with an enormous basement swimming pool".
	That is quite effective from a council tax point of view, because you pay for only one. The band H council tax in Kensington and Chelsea is £2,062.30 a year, just under £40 a week. That does not seem an awful lot to pay on a property of that size. It would also be interesting to make comparisons with other countries so that we can see how lightly taxed these very large properties are in Britain. We could make comparisons with his,
	"large, sumptuously decorated villa in the South of France, near Cannes"—
	which has—
	"one of the best views of any home in Europe".
	He has another place in Manhattan and, I believe, Israel.
	The fact that the mega-rich in our country are paying such a negligible proportion of their property value compared with somebody in a modest bungalow in a rich area or a semi-detached house identifies the gross unfairness of our existing property tax and council tax systems.
	I support the noble Baroness, Lady Valentine, on her demand for an urgent decision on Crossrail. I do not agree with her on commercial rates, which should be set locally. You cannot, by setting up committees, reverse the inevitable drifting apart of the relationship between business and local councils. It would encourage business to be more involved if the commercial business rate was no longer nationalised; Lyons says that he sees an argument for that in principle. That is one form of localisation that makes sense.
	I listened with interest and sympathy to the noble Lord, Lord Hanningfield. I look forward to the speech of the noble Baroness, Lady Hanham, but so far, I rather wish that the noble Lord was speaking from the Front Bench. He gave an imaginative speech and I welcomed his interest in local income tax. However, I did not get much sense of what alternatives the other speakers on the Conservative Benches were putting forward if, as they say, the council tax is so wrong. All I heard about was devolution.
	I do not think it honest to oppose revaluations of the council tax as long as we have it. The valuations are based on April 1991 property values which are very out of date. We strongly oppose the council tax, but if we are to have it, we cannot let the valuations become further and further out of date, year after year. That is unfair to people in deprived areas whose properties have not gone up in value.
	We look forward to hearing from the noble Baroness, Lady Hanham, and hope that the Conservatives do not regard this as a commitment-free zone.

Baroness Hanham: My Lords, like everybody else, I thank the noble Lord, Lord Bruce-Lockhart, for introducing this debate so ably. As the former leader of Kent County Council and current chairman of the Local Government Association, he has a wealth of experience and is a welcome addition to our Benches.
	I am an elected member of the Royal Borough of Kensington and Chelsea. I do not live in a house with three conversions across; I pay one council tax, which seems to be quite enough.
	It is amazing that the report on the inquiry carried out by Sir Michael Lyons—which runs to 394 pages, contains well over 100 recommendations and took, depending on who we listen to today, anywhere between two and a half and four years to complete—was apparently about to be put on the top shelf at the Department for Communities and Local Government to gather dust. Apart from some comments on what they were not prepared to consider, there has been almost total silence from the Government on this report. If these debates had not been generated here and in the other place, the report would have passed without notice in Parliament. Some of the proposals would no doubt have been cherry-picked and credited to the Chancellor or the DCLG Ministers, remaining otherwise unattributed.
	Anybody who has given the report even the most cursory glance would recognise that this work has been undertaken with the greatest care and authority. The report reads well—for once, it is not impenetrable—and it produces cogent recommendations. We do not agree with all of them by any means—in fact, we would quarrel with many—but that does not stop us recognising that a prodigious effort has been made to understand the nature of local government and its rather hit-and-miss relationship with the centre, or recognising that the issues raised in it need to be considered. I felt in reading it that Sir Michael understood the frustrations caused by micromanagement from the top and its stultifying impact on local government. A number of his proposals address that.
	How refreshing it was to find Sir Michael suggesting that the Government should leave the model of leadership of a local authority to that authority and its community. That is not the way of the Local Government Bill. I hope that his words will help us when we discuss that legislation later this Session.
	Sensibly, Sir Michael tells the Government that they should stop defining lead councillor and officer roles; in other words, to leave the governance of local government to local councils. It must be left to them to decide what they want to do and how they want to do it. That is the burden of his comments. He has trenchant things to say about local authorities having a greater say in housing policies, and draws attention to the current nonsensical situation of social care for older people, which we debated not so long ago. We recognise that this problem is gaining in significance rather than diminishing.
	The report raises issues of common sense and devolution which we would want to consider in more depth, if given the opportunity, and which would unplug the local from the centre. However, it is on finance, which everybody has discussed today, that we are likely to stop feeling much warmth towards the report's recommendations. While we agree that council tax is likely to remain the bedrock of the contribution by local residents to financing services, this report raises again—I shall again disappoint the noble Lord, Lord Oakeshott—the revaluation of property and increases in the number of bands. The Minister will know that we object to both of them. They have been canvassed by the Government previously; indeed, the revaluation proposed for 2005 was put on hold by the Government and is unlikely even to be considered again before the next election. Why? Because it was clear that it was likely to be so unpopular that they would not risk undertaking it.
	Preparations for revaluation are well in hand, a significant database of house values is being built up, and there is a manual for valuation officers for assessing properties for each band. Home improvements, views from the bedroom window, gardens, patios and new bathrooms will all come into the assessment. Digital cameras have been provided to confirm that people have had the temerity to improve their homes. One has to ask whether the Government prefer that homes should be left in a deteriorating state just because of a tax valuation.
	At least Sir Michael recognises that revaluation and rebanding are likely to have a considerable impact, particularly on those in the higher bands, and recommends a transitional system. However, I recall the controversy caused by such a system when the new business rate was introduced; it was far from welcome, even several years later.
	Lyons has the answer to part of the problem of property value increases. Older people who have lived in their family homes for years while their property has increased in value should be able to defer payment by having the cost of the tax placed as a charge on their home, to be released on sale or death. The elderly are being charged for their social care, if they need it; they are already being encouraged to take the equity out of their property to boost the pensions that the Government have decimated. Now it is being suggested that they can offset their council tax on the property as well. As I creep nearer to old age, I fear that it is not going to be much fun.
	The one aspect on which we might all be able to agree is that raised by my noble friend Lord Bruce-Lockhart: that the uptake of council tax benefit is clearly lamentable. Impossibly complicated forms and ridiculously low allowances for capital make this a benefit in breach. Sir Michael has sensible suggestions for making this easier to access and for increasing the capital allowance, from the current paltry £16,000 to at least £50,000—I should have thought that there was an argument for it to be more. We would hope that the Government at least consider that aspect urgently.
	My noble friend Lady Byford has drawn attention to the effects on the rural economy. We are jolly lucky to have her, because we do not have many voices speaking up for rural interests. It is always good to have her behind me on these Benches. She referred to the effects of a possible taxation on agricultural buildings. We should also note the idea of taxing derelict property and brownfield sites. These, together with the possibility of a planning gain supplement, would bring the development of property firmly into a tax regime but not one which would necessarily benefit the local economy. My noble friend Lord Bruce-Lockhart drew attention to and was very encouraging about the prospect of an independent commission. This is the sort of thing that would arrive on his desk and on which he or the commission would have to comment. I hope that it is a concept that the Minister will at least be able to say is being considered. It would be the buffer necessary—and I am afraid that it is necessary—between central and local government.
	I am grateful to all those from my side of the House and indeed other noble Lords who have spoken. I have a sense that the Lyons report is seen as the proverbial curate's egg—some good and some rotten—but at least we have had an opportunity to talk about it, and we will have to watch in the future, as legislation comes along, whether Sir Michael Lyons and the author of the other undiscussed report, from Kate Barker, are influencing our future.

Baroness Andrews: My Lords, like all noble Lords who have spoken in this debate, I am extremely grateful to the noble Lord, Lord Bruce-Lockhart, for this opportunity to discuss this very important matter. It is an opportunity for the Government to make their own comments on the Lyons report in a thoughtful way. I congratulate everyone who spoke and raised such pertinent and difficult questions, which I shall try to answer, although I may also have to write to noble Lords.
	I was pleased that the noble Lord expanded the canvas of our conversation this afternoon. That was reflected in the wide range of comments and issues that were raised in depth. My noble friend Lady Hollis discussed the nature of the values that we hold in relation to local taxation and spoke of fairness linked to trust. That underpins our perceptions and creates a framework in which to address many of the serious questions raised.
	I predicted that we would certainly come across the terms "long grass", "top shelf" and "missed opportunity", and they are all in my notes, although I do not agree with them. It was interesting that we had two rather different responses from the noble Lord, Lord Hanningfield, on the Conservative Back Benches, and the noble Baroness, Lady Hanham, on the Conservative Front Bench.
	I put on record our thanks to Sir Michael for the scrupulous way in which he carried out his remit and took forward his inquiry. It is a very serious report and we are grateful to him for it. I have absolutely no doubt that it will be referred to for many years to come, given the clarity of its vision, language and thinking on these very profound issues—the relationships between form, function and funding. Those are very sharp and difficult questions.
	It is nonsense to read anything sinister into the fact that we have not produced an instant response, although we tried to clarify in our immediate response some of the things that we would not pursue, in the interests of certainty. The report's recommendations must be reflected in policy. Far from shelving the Lyons report, we are implementing much of its recommendations as quickly as possible. As I believe the noble Baroness, Lady Hanham, suggested, its influence can be seen in the local government White Paper and the local government Bill. As the noble Lord, Lord Bruce-Lockhart, said in his very thoughtful and typically reasonable introduction to the topic, the concept of place-shaping—I think that the noble Lord, Lord Hanningfield, picked up on this—is crucial to the way we look at the contribution that local authorities make to making places better. Our approach to the local government White Paper was much influenced by that.
	The Lyons report is substantial, and noble Lords are right to look for the implementation of its recommendations in the local government White Paper, the Bill and the spending review. It was intended to be the start of a major debate. We sometimes wonder what the Liberal Democrats' view is on local income tax. It was clear that both the noble Lord, Lord Oakeshott, and the noble Baroness, Lady Hamwee, welcomed the Lyons report's provisions on that point. However, they should read it very carefully, because Lyons did not recommend a local income tax. He concluded that, while it might be feasible, it was important to recognise its limitations, including the risk of substantial increases for the working population. That is a very serious caveat. We shall be very interested to hear how the Liberal Democrat Party would address that.
	We must also look at the landscape against which Lyons reviewed his task, and address some of the issues raised. Not to put too fine a point on it, local government was in a pretty threadbare and demoralised state 10 years ago. If noble Lords read the debate that took place on Tuesday in another place, they will see that position described in rather more robust language than I shall use. Underperformance and underinvestment posed enormous challenges. There was an urgent need for greater transparency, a greater awareness of success and failure and clearer goals and incentives. We have kept faith with the need for more investment. In each year of that decade local government received an increase in funding above inflation—a real terms increase of 39 per cent. The noble Lord, Lord Bruce-Lockhart, quoted the figure of 14 per cent, on which we are in dialogue with the LGA, but that figure excludes the dedicated schools funding and includes the £15 billion available through specific grants for social services alone, for example. I take the argument raised by noble Lords, not least the noble Baroness, Lady Byford, about the pressures of social care in an ageing population, and they were right to raise it. It is clearly an area of serious consideration in making CSR07 and in our partnership dialogue with the Local Government Association.
	In 2007-08, we provided £3 billion extra, which is a 5 per cent increase for local government. So whatever noble Lords say about the impact of centralism—I was glad that the noble Lord, Lord Hanningfield, recognised that it has deep roots in other Governments—it was necessary to have a performance regime that represented that, and it has worked. This week's Local Government Chronicle, which is not an uncritical friend of this Government, acknowledges, when asked about the key achievements of this Government, that the performance improvement culture espoused by Ministers has resulted in a turnaround in councils' fortunes. The performance regime is seen as playing a key role in that.
	Councils are therefore reflecting that benefit. I was very impressed by what the noble Lord, Lord Howard of Rising, said, about the efficiency savings that his council has achieved. Some 70 per cent of councils are improving strongly or improving well, and there are no councils in the bottom category. Local government has kept faith too with the challenges that we created, and they are now well placed to face those new challenges, whether it is climate change or the demographics of ageing. I will have to write to the noble Baroness, Lady Byford, about the rural contribution, because I do not have those figures with me.
	What I take away from this is that there is only one route forward, which we all understand and share—more devolution, more local flexibility, responsiveness, creativity and innovation. That is the thrust of the local government White Paper. We agree entirely with the noble Lord, Lord Bruce-Lockhart, that there are parts of the country—sub-regions—where improvement has been slower. Our work on cities and city regions in the DCLG has exemplified some of that, and the Government's sub-national review is very much in tune with what he is saying. It is exploring how we further release the economic potential of the regions, cities and localities. The Budget this year provided an update by expressing what is being considered in terms of potential reforms and how to strengthen incentives across what Michael Lyons described as the wider spatial set of relationships. I can tell the noble Lord that the review will report to Ministers in advance of the CSR.
	All that provides the background. What are we responding to in Lyons? What do we intend to do? First, there are some key areas on which we are all at one on how to make local government function more effectively. We are reducing the number of targets, for the reasons that I have begun to explain, and moving away from pressures for centralism, to enable local authorities to take far more charge of their own destiny by determining their own local priorities and local targets. Sir Michael, and this afternoon the noble Lord, Lord Bruce-Lockhart, identified that large number of targets as introducing some sclerosis into the system. We are committed to reducing that and, through the task force that Michael Frater is running, to looking at how we reduce complex and burdensome data and reporting requirements.
	A second theme is the need for clarity on what central government and local government are going to do together. I am grateful for the welcome given to local area agreements and the potential that they hold, because that outcome is a deal that hands over responsibility and frees up funding for local government and local partners to decide what is best for their area. It takes us into the sub-regional agenda through the potential that multi-area agreements offer. That has been picked up by Lyons in the examples of Manchester and Kent, and the work that the noble Lord's authority is doing, working proactively together to help to improve service delivery. There are some very exciting possibilities there.
	The heart of the report and of this challenging debate essentially concerned council tax. It is important to re-iterate what Sir Michael Lyons said: there is no magic bullet, the Government need to take a developmental approach to reform, and the simple, important message is that council tax is not broken. The Lyons report emphasised that a strong case in relation to transparency and accountability could be made for a property tax, and it went on to identify the benefits. Those attributes are transparency, an easily collectable tax and a stable financial environment. We would throw those attributes away at our peril.
	The evidence produced by the inquiry showed that revaluation would not in itself have a significant impact on the fairness of council tax relative to income. We have said many times that revaluation would cause significant disruption for families and individuals. It would not bring greater fairness. Given that, we have made it clear, as the noble Baroness, Lady Hanham, re-iterated, that we will not revalue during the lifetime of this Parliament, particularly because it could significantly disrupt local government itself. The forthcoming three-year settlement for local government will conclude in 2010-11 and we would not expect to consider revaluation before that date.
	I shall now address what the noble Baronesses, Lady Hanham and Lady Byford, said on the implication of valuation by stealth. Nothing has changed in the way that the Valuation Office has conducted its work since it was established when council tax was introduced. It has no extra powers, there are no extra requirements and the implication that somehow new factors come into its calculations is seriously disturbing to people who might think that something has changed. It simply has not and we must be very careful indeed about the language we use in addressing these issues. Trained Valuation Office staff have possessed exactly the same powers of inspection since 1993 and any changes or improvements to a property that have increased its value cannot result in a higher council tax band until the property is sold.
	We have said that we would not abolish the capping regime. We understand that council tax is very much a matter for local authorities, but council tax capping powers have served us well as a discipline in deterring irresponsible increases. We first used the power in 2003-04 when council tax increases reached nearly 13 per cent, but since then it has been below 5 per cent for three years in succession. We need that additional discipline. It is not a question of trust, because we have shown trust in local authorities throughout the tone and content of the White Paper.
	I turn now to the critical question of how we make council tax fairer. The noble Baroness, Lady Hanham, was absolutely right—we share a commitment that people on low income take-up must access the benefits to which they are entitled. My noble friend Lady Hollis, who has much experience in this matter, made a tremendous case for that. We are deeply concerned to ensure that take-up is increased. One way is to make the benefits simpler to access; we are reducing bureaucracy and DWP is taking steps to simplify benefit claims. Pensioners can now access council tax benefit and housing benefit at the same time that they apply for pension credit and state pensions—four benefits, one phone call. All that the claimant has to do is to sign the shortened council tax benefit claim form and forward that to the council.
	We are simplifying the process in other ways. We are working with the Pension Service on passing the council tax information directly to the local authority—doing away with the need for a claim form at all. That will help older people, in particular. We can transfer the lessons from that into how we deal with non-pensioners—younger people who also have difficulty accessing the benefit. However, as Lyons recognised, the Department for Work and Pensions is already looking at the possibility of delivering CTB more pro-actively. The Government will certainly consider his recommendation on increasing and subsequently abolishing the savings capital limit for pensioners in the light of practicability and affordability across priorities for the tax and benefits system as a whole. They will continue to work hard with local authorities to reduce the numbers who miss out, which includes looking at the suggestion that council tax benefit could be renamed as a council tax rebate in the wider context of improving delivery.
	The idea of an independent commission raises a third set of issues around trust and transparency. The noble Lord reflected the dialogue between the LGA and Lyons on the recommendation for an independent commission. I can see the superficial attraction, but essentially we do not agree that an independent commission would be either right or effective, as it would remove political accountability. Issues of funding must stay with politicians, who can answer the questions, "Where is the money going?", "What am I getting for it?", and, "How is this service improving?". Making an independent commission responsible for that would be unfortunate.
	But we are doing something. We are building on the existing work of the Audit Commission to examine the possibility of developing and using toolkits to provide greater clarity and transparency to local people about levels of public funding. That is work in progress, and I am sure that, like me, the noble Lord will be interested to see how it goes.
	In my final minutes, I turn to the business community. It is important to be clear about what Sir Michael was saying about business rates. I know that the LGA was disappointed that he did not simply recommend the relocalisation of business rates. He said:
	"I do not think that the time is right for such a substantial change to be introduced. Local authorities and the business community still have to work on developing trust and shared objectives".
	The noble Baroness, Lady Valentine, picked up on that when she spoke of the need to develop greater trust and confidence between those two partners. We agree that business rates are a successful and stable property tax, but we do not think that there is a case at this time for changing the current RPI cap on annual increases. Relocalisation raises another question. As much as for anything else, business rates are needed as part of formula grant for equalisation. That is a fair element in the system. I was pleased that so much welcome was given to the idea of the local supplementary business rate. Obviously, that has to be subject to credible accountability, but we will certainly look at the case with the closest attention to ensure that business has a strong and clear means of holding authorities to account. Again, that is a positive response to what the noble Baroness, Lady Valentine, said. We will hold extensive discussions with key stakeholders.
	I welcome the discussion on LABGI. The noble Baronesses, Lady Hollis and Lady Valentine, both talked about the great benefits that that additional money brings. In 2006-07, 328 local authorities received £316 million. We expect the figure to go up to £1 billion by 2007-08. We have confirmed in the Budget that we will bring forward proposals to reform the scheme before the summer to continue to provide strong incentives. So there is movement on that.
	The noble Lord, Lord Oakeshott, asked about empty property relief. There are aspects of business rates on which we agree, and he will understand that we have to tackle the problems that inhibit regeneration. One of those problems is high rents. I will write in more detail about the assumptions that we have made on the figures, but essentially this is a net scorecard yield, reflecting a combination of additional rates revenue and changes to other related taxes. I think that it would be more satisfactory if I were to write to the noble Lord about that, as he asked for a detailed response. However, I make it clear that we will certainly exempt from a business rates charge empty property held by charities—it is important that they know that—and community and amateur sports clubs.
	The noble Baroness, Lady Byford, asked about the agricultural exemption. Sir Michael recognised that any change to exemption from business rates for agricultural land would have major implications, well beyond specific business rates policies. As we consider developing proposals for a review of business rates reliefs as a whole, that will be one of the things in the frame.
	We recognise the potential contribution that might be made by assignment. It will be a long-term option as we look at long-term funding.
	I shall conclude there. The context for this subject is the very challenging spending round. I understand the implications of delay. Although the timetable is tight, we are working hard to deliver our commitments to local authorities. For example, we are reviewing the implementation timetable for local area agreements, which now will not have to be signed off until June 2008.
	This has been an excellent debate and it has been important in elucidating positions and policies. I very much look forward to a situation where we can all sit down together and debate how to create a system which is not just perceived to be fair but is fair in reality.

Lord Lucas: My Lords, I am grateful for the time the noble Lord, Lord Tunnicliffe, and many people from TfL have taken to address my problems with the Bill. However, some of them remain outstanding, and I shall go through them briefly.
	I started out with great concern about the scope of the Bill. The New Roads and Street Works Act is capable of very wide interpretation, but I have been satisfied by what the noble Lord, Lord Tunnicliffe, said today and by what TfL has said to me. I understand that the ultimate protection we have against the wide extension of the Bill is that a toll order that involves an existing highway is subject to special parliamentary procedure unless the Secretary of State certifies that there will be an equivalent toll-free facility for the road user. I hope that the Minister will confirm that, or I will be very concerned about the wide exemptions from planning permission and the other freedoms given under the New Roads and Street Works Act were this to become a widespread practice in London. In application to a new bridge at Becton, I do not see that it holds any terrors for me.
	My remaining concerns about the Bill are principally focused on the powers that it gives TfL's contractors to enter vehicles. TfL has explained to me that it imagines that it will have a system of automatic detection of vehicles that go through the toll. That is quite a long way in the future as we are looking at 2012 for the opening of this bridge. Perhaps it will be swung out to the congestion charge at the same time; I do not know. It will be partly based on some kind of transmitter or chip inside a vehicle that will register the passing of an unauthorised vehicle and provide some kind of automatic imposition of the toll. To deal with situations where that chip or mechanism has been tampered with, there is a provision in the Bill that TfL contractors can demand entry to your car. If you refuse them entry you will be subject to a fine at level five or six months' imprisonment. So it is a pretty hefty sledgehammer which TfL wish to take to crack this particular nut.
	My first problem is that TfL's contractors can be any old person. It employs a range of firms, one of which is Drakes, which was the subject of the recent whistle-blower programme in respect of its bailiffs' activities. These people are not licensed in any public way, yet we are going to give them power to enter somebody's vehicle at any time of day, and—looking at the additional powers in the Bill—not only on the street, but in a "public" car park such as a supermarket, a hospital or an office, which are places one might regard as private or semi-private.
	You can imagine yourself being confronted by some lumpy individual at 10 o'clock at night in the dark of a Marks and Spencer's car park, demanding entry to your car, and saying that if you do not let him in, you are in for six months' inside. I find it an extremely difficult bridge to cross as to whether these are the sort of powers we should give to unlicensed contractors of uncertain reputation.
	I am told by TfL, although it is not something which I have investigated, that there is some legislative chain which leads back under the current legislation to mean that this power would have to be exercised either by a police constable or in the presence of a police constable. If that is the case, the Bill should state it. Let us have that provision in the Bill as something which is fixed and permanent. To have something which is subject to ministerial whim, to statutory instrument and to uncertain interpretation of lawyers is entirely unsatisfactory.
	Let us also have a system for properly licensing the contractors who carry out the work. There is a system in place, the Private Security Industry Act, by which wheel-clampers are licensed. That is being extended by the Department for Constitutional Affairs to cover bailiffs and others. Its intention is that the same regulatory body will be expanded and given increased powers to cover them. That would seem to be an entirely appropriate body to carry out the licensing and supervision of those increasingly powerful contractors that Transport for London uses, particularly since, in the case of Drakes and, I imagine, one or two others, these people will eventually be subject to that body anyway; those firms are probably using the same personnel as bailiffs or for TfL enforcement alternately. Therefore, I do not think that this provision would create great problems. It would put these people on a proper footing with a proper set of responsibilities and a proper set of guidance, and it would give a proper way for the public to deal with situations where they overstep the bounds of reasonableness or misbehave themselves, such as will be provided for other people who find themselves in similar situations when TfL is not involved.
	Such a provision could not be put in the Bill because the system is not there yet. However, an undertaking by TfL that it will pursue and be happy to talk to the Department for Constitutional Affairs about this, and that it will aim to have its contractors properly regulated when the new system comes into being in a year or two's time, is necessary to give us the comfort required to allow these additional powers for Transport for London contractors.
	As the noble Lord, Lord Tunnicliffe, hinted, some national problems also come to bear here. Increasingly, we are finding penalties imposed on the owners of vehicles rather than the people who are in charge of them at the time. As far as I can see, we have not as a nation taken any steps to ensure that the DVLA is up to the strain of imposing responsibility on the owner, when the owner is defined by the DVLA. People increasingly buy cars through the internet or magazines. If you buy a car in that way, you have no way to check whether any fines or other charges are outstanding on that vehicle. There is no central registration of those charges. There is no means of ringing up the DVLA to check. There is certainly nothing on the internet to enable you to call a number to ask whether the position is outstanding on that vehicle.
	That would not present a problem under any form of data protection, because we already do that for the hiring status of vehicles, to find out whether there is any outstanding hire purchase on a vehicle. That is not beyond the wit of man. The Government may care to know that Transport for London is considering providing such a facility itself off its own bat for its own charges. That helps a bit but does not help for the more general picture. In the spirit of fair play, if the Government are imposing those additional burdens on the owners of cars for their convenience, they should provide as a convenience in return the ability for people to find out what is outstanding on their vehicle or a vehicle that they intend to purchase. That is not a complicated or difficult thing to do but would have great benefit and would enable the Government to roll out the principle of the owner being responsible much more widely, effectively and fairly.
	That will come back to this House in the not too distant future when we consider the London Local Authorities and Transport for London Bills, in which we are considering giving individual London local authorities and Transport for London the power to clamp and take away a vehicle on which there are three or more penalty charges outstanding. But there is no way that anyone has of knowing whether their vehicle has that status and no way that a London local authority has of knowing whether the owner information shown is correct or whether the person responds at their existing address.
	The whole thing is a disaster waiting to happen. If it is imposed on a large scale, a lot of people will find their vehicles removed for no good reason. They will then find that they have to pay enormous sums—£1,000 or more, even if there are only three tickets outstanding—to recover their vehicle, or face a wait of three months or more to recover it through argument. There is no clear way provided to deal with disputes about whether the vehicle has been taken correctly. People may find themselves arguing with a number of London authorities, each of which has one penalty notice that it says is outstanding against them.
	So that is a really problematic area. More and more, local government wants to use those facilities to improve its ability to recover money due to it. I thoroughly approve of that, but if we are to do that, we must centrally provide the proper facilities to enable it to happen well. I shall not charge TfL with any of that responsibility; I am merely taking the chance to berate the Minister about it. I shall be much harder when it comes to the next TfL Bill, which would result in real damage. For today, I should be grateful if the noble Lord, Lord Tunnicliffe, can confirm whether TfL is serious about providing its customers, as it were, with the ability to find out what is outstanding on their car or any car, so that the powers in the Bill will not bite on a citizen who has acquired a car from a habitual congestion charge offender.
	However, there are things that I want to impose on TfL. We are considering a system that is not intended to be a disincentive to travel. When the congestion charge was introduced, it was deliberately made extremely hard to pay it, and it was deliberately made very painful for you if you forgot. After 10 o'clock at night, there was no escape; you paid the £50 penalty. There was no easy way of buying a book of tickets in advance and then simply ticking them off and being told when you had only two left. You could not pay by direct debit. All sorts of helpful ways in which payment could have been made were not implemented. We are getting slow and gradual improvement in that. I disapprove of this. I should be extremely upset if a Conservative mayor treated me that way. I expect it of the current mayor. There is some sense in it in that it is meant to be a penalty and a disincentive, and making it nasty and full of teeth is, in a way, a reasonable thing to do. That does not, however, apply to a toll.
	We are providing this bridge to make it easier for people to travel between one place and another; indeed, we should encourage them to do so. We should therefore not deal with the toll as if it were a penalty and a disincentive. We absolutely must have a promise from Transport for London that, if it is going to take these powers and impose these penalties, it will make it as easy as possible for people to pay and that it will look for all sorts of innovative and useful ways to make as certain as possible that people using the bridge do not forget that there are many ways in which they can pay.
	Transport for London must also ensure that when people fail to pay, by mistake or through inattention, they do not get slammed with a £50 fine that is part of a penalty regime. Of course people should pay a little extra, but it should not be a massive penalty or a trap for the unwary. A service is being provided. If someone is late in paying, the fee could be doubled, and then upped if it was not paid for a long time, but the regime should not be punitive. I really would like some comfort from TfL that it will approach this in the spirit of service to the user, rather than trying to extract the maximum possible revenue from those who are forgetful.

Baroness Hamwee: My Lords, I thank the noble Lord, Lord Tunnicliffe, for introducing the Bill and taking us through a number of its provisions, which are not immediately obvious to new readers, among whom I include myself. I should say to the noble Lord, Lord Lucas, that I am in no way a spokesman for the current Mayor, although he would certainly wish to promote himself as someone who does not slap penalties on to users of roads subject to the congestion charge. My group was delighted when he eventually took up our proposal that there should be a facility for paying the following day. He had until then taken the view, which I felt was far too paternalistic and nannying, that it would confuse drivers to have the opportunity to pay the following day because they would naturally leave it until the next day and then forget. I am glad that that bit of progress has been made.

Baroness Hamwee: My Lords, it was not my personal initiative. I must ask the noble Lord, Lord Tunnicliffe, why he has introduced the Bill now. The Bill seems to spring from the requirements of the 1991 Act. Is it because of the prospect of the Thames Gateway Bridge? Perhaps the noble Lord will admit that someone has realised that the existing provisions are inadequate and that there is a need to expand them.
	The first thing that occurred to me when I read the Bill was the constitutional position. We have heard about the safeguards, which are the Greater London Authority, which will have to confirm an order, and then, as a long stop, the Secretary of State. The Mayor may be a member of Transport for London. If he is a member of the Transport for London board, he must be the chairman of that board. The Mayor also carries out the functions of the Greater London Authority. I admit that I have not quite got my head around the constitutional protections in Transport for London having to get confirmation of an order from the authority.
	Clause 5(3) sets out a number of steps which the authority "may", but not "must", do in terms of consultation, publication and so on. It may be that this is exactly the same as under the congestion charging provisions. I have not had an opportunity to look, but perhaps the Minister or the noble Lord can assist me on that today or subsequently. I am unclear too on the parliamentary procedure or, to put it another way, the democratic input. Secondary legislation would normally have to go through some sort of parliamentary procedure, inadequate as many of us have described it on a lot of occasions.
	I declare an interest as a member of the Liberal Democrat group on the London Assembly where we have considered the Thames Gateway Bridge frequently. If it is acceptable to us at all, it is acceptable only if there is a system of differential charging, so that vehicles such as international heavy goods vehicles are deterred from using the bridge as an alternative to the Dartford crossing. Very importantly, people who live locally want to be able to access employment opportunities and so forth on the north side of the river—the demand seems to be in that direction in particular—without having to pay as heavy a toll as those using it as a through route. I understand that local authorities, through the Thames Gateway London Forum, believe that this would be technically possible. On listening to descriptions of using new technology and vehicles, from a completely uninformed point of view, differential tolling seems likely, but I hope that that can be confirmed.
	Before I say my next remarks, I should say that I and my party generally see a great deal of benefit in developing road pricing. A short search of the internet has turned up, inevitably, fairly extreme ideas, as one tends to get from people who share theirs with the world through the internet. How accurate it is, I do not know, given that the first item I found, from the London Motorists Action Group, says that this Bill has passed through the House of Lords largely unnoticed. Quite what we are doing giving it a Second Reading today, I do not know.
	Perhaps the noble Lord would comment on an extreme, but possibly accurate, lay description of the Bill. It is a test bed for national schemes—I do not expect the noble Lord, Lord Tunnicliffe, to put his head on the block on that. Drivers will face six months in jail and a hefty fine if they tamper with spy-in-the-car tracking devices. There will be unprecedented stop-and-search powers to enter vehicles to check that devices have not been tampered with. Drivers who remonstrate with officials could face up to six months in prison—I do not imagine that they are fingered and put into prison immediately, but that is how this Bill reads. The same applies to obscuring registration plates or using false documents. Our discussions on the congestion charge have included quite a lot of debate on the obscuring of registration plates. Very muddy number plates are to be found on some vehicles.
	The Minister may be able to comment on the suggestion that the Bill gives the Secretary of State for Transport powers to prevent a toll scheme going ahead if the equipment is incompatible with a national standard. This may be a matter for the original Bill, but it also occurs me to ask whether the tolls we are talking about would apply to diplomatic vehicles, given the controversy over payment of the congestion charge by representatives in foreign embassies.
	I have said that these suggestions are being put forward in lay terms. Because this is an enabling provision, but perhaps not only for that reason, the language of the Bill is not readily understandable and therefore it is not easy to understand its impact. I agree strongly with the noble Lord, Lord Lucas, that the legislative impact and legislative chains might well be made very clear.

Lord Hanningfield: My Lords, I thank the noble Lord, Lord Tunnicliffe, for introducing this small but interesting and possibly important Bill. I also thank my noble friend Lord Lucas for effectively giving us the opportunity to clarify some of its finer points today in your Lordships' House.
	The whole issue of how we pay for the use of our roads in this country is becoming an increasingly vexed subject. We all saw the reports of how nearly 2 million people signed a petition on the Downing Street website opposing the Government's grand plans for a national road charging scheme. We have also recently witnessed the westward expansion of the mayor's congestion charging zone. We are in the middle of a departmental consultation on the new charging regime for the Dartford crossing. There is certainly a lot of movement in this area and it is therefore timely to be discussing legislation of this kind.
	As the noble Lord, Lord Tunnicliffe, mentioned, the purpose behind the legislation is to set up a charging regime to pay for the new Thames Gateway bridge. Let me say at this point that of course we support the bridge and welcome the undoubted economic boost it would give to what has been traditionally a deprived area of London. However, it is the unintended consequences of this legislation which other noble Lords have mentioned that I wish to concentrate on. In general, we would be opposed to any road in London or anywhere else imposing two charges, both a toll and a congestion charge. If we are to have road charging, and it is likely that that will happen, it is only right that even if we have differential rates, each road should have only one charge on it. I am not clear how a congestion charge and a toll would fit together.
	The chief objective of the Bill is to give Transport for London and by inference the mayor—although as the noble Baroness, Lady Hamwee, pointed out, the mayor could give himself his own approval—additional powers to make provision for the operation and enforcement of toll orders similar to the powers exercised by TfL and the mayor over the congestion charge. However, my current reading of the Bill is that in theory—I stress that—it would confer on TfL the power effectively to impose a toll on any road in London. I know that my noble friend Lord Lucas may have been given some assurances, but I am still unhappy about this. In effect, any major trunk or arterial road could be subject to a toll; it would not restrict TfL to charging a toll on the gateway bridge. While TfL might have to go through a number of procedures and jump through some hoops before it could do so, the fact remains that this Bill may give it the potential to create new tolls wherever it wants.
	The Highways Act 1980 provides the definition of a "special road", as used in the New Roads and Street Works Act 1991, to describe which roads can be designated as toll roads, to which reference is made in the Bill. The 1980 Act provides that a special road is authorised not only by the construction of a new road but also by the "appropriation" of an existing one by the relevant transport authority, obviously in this case, TfL. Therefore, by definition, TfL could have the power to make a toll order under the powers in the Bill on any road in Greater London by appropriating an existing road and designating it as a special road.
	Additionally, Clause 6 of the Bill states that the provisions of Schedule 23 to the GLA Act 1999,
	"shall have effect in relation to the TfL toll order".
	Paragraph 9(2) of Schedule 23 to the 1999 Act states:
	"A TfL scheme may apply to an area which consists of the whole or any part of Greater London".
	That could therefore mean that Clause 6 of the Bill allows TfL to make a toll order on any road in Greater London. These are questions that in theory we all have some concerns about.
	My other concern is that the Bill does not place any requirements on TfL to consult when exercising its powers. How will TfL meet the belief of London Councils that it is important that TfL should consult boroughs fully on any proposed toll order? Do the Government think there is a case for any proposed toll to be subject to full consultation with residents and businesses across the whole of London—even with the whole of the south-east—as London is strategically important to the whole region?
	I hope I have managed to outline our concerns on this legislation. I hope that in his remarks the Minister will be able to provide the reassurances that I and many Londoners are seeking. If he cannot give us all the answers tonight, I should be grateful if he would write to us and outline some of them further.

Lord Bassam of Brighton: My Lords, I am grateful to my noble friend Lord Tunnicliffe, with his wealth of experience and his long history of working to make London a more mobile and accessible place. He has a great track record in that regard. I am pleased that it is he who is taking the Bill through the House of Lords rather than my good self. It is quite nice to share the excitement and the flak on these things, and he has done that job with his customary style and in good order. As the noble Lord, Lord Hanningfield, has said, this is a timely debate, given the issues that have been raised during this short discussion today.
	My noble friend stressed in his speech that the purpose of the Bill is to allow Transport for London to make additional provision for the collection and enforcement of tolls pursuant to toll orders made under the New Roads and Street Works Act 1991. Great emphasis has rightly been placed on ensuring a more efficient and effective collection and enforcement regime. Having carefully considered the provisions set out in the Bill, I am happy to endorse my noble friend's statements.
	The 1991 Act provides for tolls to be collected to fund new roads. Transport for London, and indeed any other highway authority, may seek authorisation to charge tolls by making a toll order under the 1991 Act. Such toll orders are then subject to validation by the Secretary of State. Before the Secretary of State can validate the order, public notice must be given and interested parties have the right to object. If the Secretary of State receives an objection from any person, he can ask for a local inquiry to be held to consider any substantive points at issue. Such an inquiry is not mandatory. However, where a local inquiry is not held, the Secretary of State is still required to take into account any objections made when deciding whether or not to confirm the toll order. So there are checks and balances all the way through the process.
	At the moment, TfL has applied only for the confirmation of one toll order, which relates, as we have heard, to the construction of a new bridge, which all parties support, known as the Thames Gateway bridge, which would connect Beckton to Thamesmead. Transport for London has made an order to authorise the charging of tolls over the new bridge to finance its construction. That again has a long history, as the noble Lord, Lord Hanningfield, made clear in his comments relating to the Dartford toll.
	An application has been made by Transport for London to the Secretary of State for the validation of the order, together with related applications for planning permission and other orders needed to authorise the construction of the bridge. As the House has already heard, those applications have been the subject of a public local inquiry in Charlton which was concluded on 3 May 2006. The Secretary of State's decision on those applications, including the confirmation of the toll order, is awaited.
	The Bill will not change the key provisions of the 1991 Act. Should it receive Royal Assent, toll orders will still have to be submitted to the Secretary of State for validation. The Bill instead proposes to take the established process for imposing tolls forward on new roads by addressing shortcomings in the collection and enforcement regimes. We would all accept that things have moved on since 1991, with new technology and new means of collecting tolls. Again, I stress that it will apply only in circumstances where Transport for London has previously been authorised to charge tolls under a toll order made under the New Roads and Street Works Act.
	Toll orders made under the 1991 Act presume that tolled roads or bridges will have barriers at one or both ends that operate to secure the collection of tolls and a means of enforcement. These are toll gates as we recognise and understand them. As we know from our experience as drivers, they can be slow, but in most cases they work very effectively.
	The Government recognise that while such a basic tolling system was reasonable in almost all circumstances in 1991, matters have advanced. Using toll booths and gates slows traffic unnecessarily and adds to journey times and congestion. In the mean time, modern technology enables tolling to be carried out without the need for barriers. The provision of a more efficient means of collection and enforcement of such tolls can be only of benefit to the public purse and to the public in other regards.
	I accept the argument, and disagree with the noble Lord, Lord Lucas, that the detailed provisions for the collection and enforcement of tolls under a Transport for London toll order do not belong in a Bill. Such lengthy and detailed provisions belong in a supplemental toll provisions order made by Transport for London. The key question is, therefore, whether adequate safeguards are built into the approval process for such supplemental orders.
	Before confirming such an order, the Greater London Authority is required to give notice to the Secretary of State, who will then have the opportunity to scrutinise the order. He will have the power to object to any provision which confers a power on Transport for London that differs substantially from an existing Transport for London road user charging scheme; for example, the central London congestion charging scheme. Should the Secretary of State make such an objection, the provisions of a supplemental toll order cannot come into force until the objection has been addressed. In this way, the Secretary of State will continue to be able to ensure that any new provision included in a supplemental toll provision order is reasonable and consistent with government policy.
	The noble Lord, Lord Lucas, asked whether I can confirm that the Department for Transport and Transport for London would ensure that TfL's enforcement activities are within the scope of any changes which emerge from the current consultations of the Department for Constitutional Affairs. I am happy to be able to commit the department to take all reasonable steps to achieve that objective.
	The noble Lord raised some other points, in particular with regard to ensuring that prospective owners of a car can establish whether it is subject to outstanding penalty charge notices. Vehicle owners are, of course, responsible for ensuring that the DVLA is informed of the sale of a vehicle. It is in the seller's interests to ensure that they are not liable for offences committed by the new owner. Transport for London will use DVLA data to ensure that new registered keepers are not subject to enforcement activities taken against the previous keeper of their vehicle.
	As the noble Lord noted, in London, Transport for London is working to set up a database that will allow prospective new owners of vehicles to check whether a vehicle has been logged as a persistent evader. In addition to alerting the DVLA, the new registered keeper will also be able to advise the database keepers of the transfer of ownership and have the database amended.
	The noble Lord, Lord Lucas, asked another question to which I may have an answer, or I may have answered it already. He asked whether a special road scheme incorporates an existing road and whether the Secretary of State can confirm the scheme. The Secretary of State cannot confirm the scheme unless he is satisfied that another reasonably convenient route is available for traffic other than the traffic authorised by the scheme or that an alternative route is not reasonably required. That is in Section 18(6) of the Highways Act. I hope that that answers the noble Lord's question.
	The noble Lord, Lord Lucas, made other points about contractors, licensing schemes, enforcement and penalties for owners of vehicles. I think that most of those points have been responded to. The Department for Constitutional Affairs is dealing with SIA and so on. I think that I have covered most of the noble Lord's concerns. If I have not done so, and if the noble Lord, Lord Tunnicliffe, is unable to do so, I am sure that we can properly check Hansard and correspond with noble Lords whose points have not been addressed.
	The noble Lord, Lord Hanningfield, drew attention to the importance of consultation with London boroughs. I agree with him, and I am grateful to him for raising it. I am sure that we can ensure that more-than-adequate consultation with London boroughs takes place. The procedure certainly suggests that, and I would expect it to be the case in any event.
	This is entirely useful legislation. It does not give to Transport for London anything more than it already has. The legislation is modernising and will facilitate the collection of tolls for the financing of valuable new infrastructure across London. For those reasons, I am happy to add my commendation of the Bill to your Lordships' House.

Lord Tunnicliffe: My Lords, I thank all noble Lords who have taken part in the debate and particularly the Minister for his support. I shall respond to one or two of the points that were made by the noble Lords, Lord Lucas and Lord Hanningfield, and the noble Baroness, Lady Hamwee.
	On the scope of the Bill, and as has been confirmed by the Minister, I can assure both noble Lords that the Bill does not propose to provide Transport for London with any additional powers to impose tolls or to provide for London-wide road-user charging. Transport for London cannot impose tolls on roads without the Secretary of State's confirmation under the New Roads and Street Works Act 1991, which is subject to procedural requirements including, in appropriate cases, the holding of public inquiries. Additional statutory safeguards, including parliamentary procedure, exist in relation to the imposition of tolls on existing roads. The Bill does not alter that position.
	The noble Lord, Lord Lucas, also raised the matter of vehicles being entered by enforcement officers. The powers proposed by the Bill are based on Transport for London's existing powers relating to congestion charging. As with the existing powers, the powers in the Bill would operate only in circumstances where it is suspected that deliberate steps have been taken to avoid payment of the toll or to avoid being identified as failing to pay the toll. The existing powers can be exercised only by constables or in the presence of constables, and it is envisaged that the same restrictions would be applied to the proposed powers.
	I understand the concern of the noble Lord, Lord Lucas, about private bailiffs and the desirability of their being regulated. However, TfL does not use the services of private bailiffs. TfL officers who carry out on-street enforcement activities are governed by the Road User Charging (Charges and Penalty Charges) (London) Regulations 2001. Bailiffs who carry out debt collection on behalf of TfL are members of either the Certificated Bailiffs Association or the Association of Civil Enforcement Agencies and operate under a code of conduct.
	The noble Lord, Lord Lucas, mentioned also that the payment of the tolls should be user friendly. There were some teething problems with payment of the congestion charge when it was first introduced. Since that time, Transport for London has listened to customers and improved the payment methods available by introducing a number of new methods to make payment easier. The payment methods are kept under review and Transport for London is currently considering the introduction of payments through direct debit.
	Transport for London has sent a written response to the noble Lord, Lord Lucas, replying in more detail to the points raised by him and, as I said in my opening speech, Transport for London will be very happy to continue to discuss any remaining concerns of the noble Lord and other noble Lords and will respond to the detail in writing.
	I turn to the points raised by the noble Baroness, Lady Hamwee. She asked, "Why now?". The answer is, of course, the Thames Gateway Bridge and the need to put together a package so that negotiations can be entered into by potential construction and franchising firms. We will write to her on the constitutional matters but, broadly speaking, the constitutional form is meant to mirror identically, or more or less identically, the congestion charge regime. As for differential charging, Transport for London has shared some of its ideas with me that go some way to meeting the noble Baroness's concerns, and we shall share the details with her in writing.
	The two offences that carry the possibility of imprisonment are equivalent to existing offences relating to the congestion charging scheme which carry the same penalties. The first category relates to persons interfering with the equipment, obscuring or tampering with number plates or falsifying documents with the intention of avoiding payment of the toll or being identified as liable to pay the toll. The second category is when a person intentionally obstructs an officer authorised by TfL in the exercise of the powers under the Bill to enter vehicles when that person has reasonable suspicion that the vehicle contains equipment relating to the toll that has been tampered with or there are false documents. These are instances in which deliberate steps are being taken to avoid payment of the toll or being identified as failing to pay the toll, such as tampering with equipment or the provision of false documents. TfL considers that taking such deliberate steps is a serious matter and, in these limited circumstances, considers that the proposed penalties are justified.
	I hope that I have covered most of the points made by the noble Lord, Lord Hanningfield. I say again, because it is important, that the Bill does not give TfL any new powers to impose tolls.
	Noble Lords raised several other points, but there is other business to follow so I shall stop. I assure all noble Lords that what has been said will be very carefully studied by Transport for London. It is a great pleasure for me to be able to assure noble Lords that they will be written to on their points and the letters shared between them, and it is a great pleasure to know that I shall not be writing the letters but TfL will.
	The Bill will assist Transport for London to finance the construction and operation of important new infrastructure projects in London, particularly the new bridge.
	On Question, Bill read a second time, and committed to an Unopposed Bill Committee.

Lord Jenkin of Roding: My Lords, perhaps notwithstanding the lateness of the hour I might be allowed a few introductory words. The promotion of a private Bill can be a long and tortuous process. Noble Lords may be surprised to learn that it was back in July 2005 that the House passed the Second Reading of this Bill.
	A Bill of this nature is likely to attract opposition from a variety of quarters, and indeed that has been the case. When it was introduced, and as it remains, this Bill is the largest general powers measure promoted by local authorities in this House for very many years. Perhaps that may go a long way to explain why it has taken so long to reach this stage. The subject matter of the Bill is very wide-ranging in nature, dealing with matters as diverse as hostess bars, portable advertisements and overgrown gardens, and many other issues.
	Opposition to the Bill came from a variety of quarters, including government departments. Originally, 26 petitions were deposited against the Bill and altogether there have been some 17 government reports on it. But I am pleased to report to the House that constructive discussions between the promoters and at least some of the petitioners and government departments led to amendments being made in Committee that have proved acceptable.
	Not all petitioners were equally satisfied. The Select Committee, assiduously chaired by the noble Baroness, Lady McIntosh of Hudnall, and her colleagues—I see that my noble friend Lady O'Cathain, who was also a member of that Select Committee, is present—sat for 11 days in March 2006 and heard arguments from petitioners on a number of subjects. One of the most contentious, which noble Lords will remember was raised by a number of noble Lords on Second Reading, was that of Lincoln's Inn Fields. Noble Lords will no doubt be pleased to learn that the Select Committee decided that those particular provisions should be struck out and they do not appear in the Bill before us this evening. The Bill was then considered by an Unopposed Bill Committee in June last year over two days, and since then it has been awaiting this stage.
	Noble Lords may be interested to know why that that long delay occurred because there were further discussions between the promoters and various bodies concerned with Part 4, which deals with second-hand dealers. That innocent phrase includes the whole of the London trade in arts and antiques. My noble friend Lord Brooke of Sutton Mandeville, who apologises for not being present, proved to be a doughty champion of that trade.
	With that in mind, I shall now describe briefly the various amendments that are grouped with Amendment No. 1. These amendments reflect the decision of the promoters of the Bill to withdraw Part 4, which deals with the registration of second-hand dealers. Although that part is well precedented in other Private Acts, it attracted very strenuous opposition from the British Art Market Federation, which petitioned against the Bill and appeared before the Select Committee. It was only after that stage had been completed that the promoters became aware of the opposition of no fewer than four government departments; namely, the DCMS, which had the interests of the art market at heart; the DTI, which raised concerns about internet dealers such as eBay; the Cabinet Office Better Regulation Unit, whose remit is to ensure that regulation is required only where necessary; and, perhaps most importantly, the Home Office, which objected to the fact that the police were to be given powers under Part 4 to carry out investigatory and enforcement activities. Given that the main purpose of Part 4 is to deal with the market in stolen goods, the promoters came to the view that without police powers the legislation would be largely fruitless. They considered the great weight of the opposition against them and came to the conclusion that it was so great that, had Part 4 survived this House, it might well have fallen in another place. We look forward to seeing how the Government take forward the whole issue of the registration of dealers in second-hand goods in the light of the consultation exercise, which I understand is to be undertaken by the Home Office.
	I express my gratitude to the members of the Select Committee who argued, on balance, that the part should stay. I am also grateful to my noble friend Lord Brooke of Sutton Mandeville for withdrawing the amendments that he tabled at the request of the BAMF. Amendments Nos. 1, 3, 28 to 38 and 44 all involve the removal of Part 4. I beg to move.

Lord Jenkin of Roding: moved Amendment No. 9:
	Page 12, line 35, leave out "number" and insert "mark"
	Clause 18 [Defacement of buildings]: